Generics manufacturer Perrigo has agreed to purchase Ireland-based Elan Corp for $8.6bn in a cash-and-shares deal.
The deal means that US-based Perrigo will benefit from royalty income from the blockbuster MS drug Tysabri and a more tax-efficient corporate structure, the Financial Times reports.
If the deal is approved by regulators, Perrigo will pay Elan shareholders $6.25 in cash and 0.07636 shares of New Perrigo for each Elan share. This values each share at $16.50, based on Friday’s closing price.
Perrigo said that the takeover will deliver synergies of more than $150m a year after tax operations.
Due to Ireland’s attractive corporation tax laws for pharmaceutical companies, set at 12.5%, Perrigo expects the transaction will it reduce its effective tax rate significantly below the US corporate tax rate of 35% into the high teens.
The deal has been approved by both company’s boards and is expected to close by the end of the year.
Elan was last month the target of a hostile $8bn bid from Royalty Pharma, which eventually led to court action. Royalty’s final bid was for $13 a share in cash and a further contingent value right, worth up to $2.50 a share. The bid eventually lapsed.
Image: The deal, which has been approved by both company’s boards, is expected to close by the end of the year. Photo: courtesy of Cristian Bender.