Irish pharmaceutical company Elan has agreed to buy two private drug companies and plans to buy back more shares as it looks to fend off a takeover bid from US investment firm Royalty Pharma.
Elan said it will buy AOP Orphan, an Austrian company focused on rare and orphan diseases, for €263.5m, and pay $40m for a 48% stake in Dubai-based sales and marketing firm Newbridge Pharmaceuticals.
If the first package of acquisitions is approved by shareholders, Elan will still have $1.2bn in cash left to spend, chief executive Kelly Martin said in a statement today.
The move comes just a week after the company said it will pay $1bn to US group Theravance for a 21% stake in its potential future royalty payments from GlaxoSmithKline relating to respiratory drugs.
Elan rejected Royalty Pharma’s $5.7bn takeover bid last week and urged shareholders to ignore the "grossly inadequate" offer of $11.25 per share by returning cash and going on a spending spree.
According to Martin, the timing of the latest deals has "nothing to do" with the Royalty offer, but it’s being communicated this way because this allows shareholders a choice.
"[Do] they want to sell their shares to Royalty at a discount or do they want to continue to be invested in an entity that is creating a portfolio of interesting and different assets?" he told Reuters.
Elan has also proposed a $200m share repurchase programme and a debt offering of $800m to optimise capital structure and cash balances.
The firm will hold an Extraordinary General Meeting (EGM) on 17 June to obtain shareholder approval for the transactions.