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Elan Provides Update Post Restructuring Announcement Of Tysabri Collaboration

Elan Corporation, plc (NYSE:ELN) today provides an update to the market post the February 6, 2013 announcement regarding the restructuring of the Tysabri® collaboration with Biogen Idec. As previously announced, under the terms of this agreement, Elan will move from the current 50:50 business collaboration to an upfront payment of $3.25 billion and a double digit tiered royalty structure for the life of the complete Tysabri asset.

Mr Kelly Martin, CEO commented, “Understandably, many market participants are looking forward to further clarity around how we intend to deploy the significant upfront payment we will be receiving from Biogen Idec upon the close of our transaction. The goal of this communication is to provide additional information to our investors.” Mr Martin continued, “We have been making significant progress in this regard and are prepared to move expeditiously, upon close, on the redeployment of capital.”

The Board of Directors, executive management and a number of our key advisors have been working on a possible restructuring of the Tysabri relationship for many years. The unlocking of a portion of the Tysabri asset value provides Elan with significant strategic flexibility and a unique opportunity to reset the company along a number of dimensions.

Upon the closing of the Tysabri transaction Elan will, in accordance with applicable law and regulation (including by obtaining any required consents or approvals), execute along three dimensions:

I. Strategic Initiatives: A portion of the $ 3.25 billion will be invested into a variety of business assets. From a portfolio point of view, these assets will, characteristically, diversify Elan from a product, science/clinical, therapeutic, and geographic point of view. As mentioned previously, in anticipation of agreeing to the Tysabri restructuring, we have spent significant time evaluating assets around the world and establishing relationships that might ultimately lead to constructive strategic transactions. We are pleased with our progress along these lines. We are enthusiastic about the opportunities that exist and we expect to be in a position to announce a number of strategic transactions upon or following the close of the Tysabri restructuring.

II. Debt Refinancing: Following closing of the Tysabri transaction, Elan will refinance its outstanding debt. We have worked closely with the credit markets over the past ten years and value the access to capital and long standing relationships that we have with our creditors. Details regarding the refinancing will be made public following the close of the Tysabri restructuring.

III. Share Repurchase: Following closing, we will institute a share repurchase program by utilizing $1 billion of the upfront proceeds from the Tysabri restructuring, with the method to be detailed following the transaction closing. This enables a significant portion of the unlocked value of Tysabri to be returned to shareholders directly. Additionally, and as outlined previously, the upfront cash payment to Elan will have little to no tax burden and part of our objective is to enable shareholders to benefit directly from that structural advantage. Following this transaction, Elan retains over $1.5 billion in accumulated tax losses and other structures as well as our favorable Irish tax structure. We greatly value our shareholder relationships and the access to equity capital these relationships give us and we appreciate the time horizon of many of our long term holders. We will continue to work on ways to unlock incremental value to their direct benefit.

In closing, Kelly Martin concluded, “Our actions over the past years have been consistent in theme and execution. We have reduced risk (financial, asset concentration, infrastructure burden) while, at the same time, preserving the upside from future advancement of science, clinical or commercial products. By unlocking a portion of the Tysabri asset value while retaining a significant earnings upside, we have a unique opportunity to reward shareholders, diversify our business and create a highly distinctive business platform upon which to advance to the benefit of shareholders and patients around the world.”

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