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ISS Recommends Shareholders Vote AGAINST All Elan Proposed Transactions

NEW YORK, June 3, 2013 /PRNewswire/ -- Royalty Pharma today announced that Institutional Shareholder Services ("ISS"), a leading independent proxy advisory service, has recommended that Elan Corporation, plc (NYSE: ELN) shareholders vote "AGAINST" all items on the agenda for Elan's upcoming extraordinary general meeting ("EGM") on June 17, 2013.  This includes the Theravance Transaction, the AOP Orphan acquisition, the divestment of ELND005 and the $200 million share buyback.

ISS withheld issuing a recommendation on Royalty Pharma's all cash tender offer, but noted that voting against Elan's proposals "leaves the door open for shareholders to tender their shares if so they wish." 

Pablo Legorreta, Chief Executive Officer of Royalty Pharma commented, "We welcome ISS's recommendations regarding Elan's proposals.  We are not surprised that ISS has recognized that Elan's proposed transactions are not in the best interests of Elan shareholders.  Royalty Pharma's fully financed, cash confirmed $12.50 per share offer gives shareholders certainty and full value of their shares now, in stark contrast to the value destructive transactions proposed by Elan's Board and management.  We believe shareholders will welcome the opportunity to sell their Elan shares now and reinvest the cash they receive in companies with superior management teams."

In its report ISS made the following important points in issuing its recommendation that shareholders vote AGAINST all the Elan proposals:

  • "In aggregate, the inconsistent management of cash return to shareholders, the timeframe over which the Theravance, AOP Orphan and Newbridge transactions were negotiated, and the lack of a fiduciary out in the Theravance transaction, don't readily support a conclusion that this was a coherent process designed to create shareholder value. On the contrary, what they suggest is that the process may have been driven, instead, by the desire to avoid a takeover by Royalty Pharma."
  • "The Royalty Pharma offer ... certainly appears to offer more value for materially less execution risk."
  • "…the proposed [Elan] transactions are unlikely to be value accretive to shareholders, and their approval might well curtail other strategic options which could bring higher value with materially less execution risk…"
  • "The absence of a 'fiduciary out' from the Theravance contract is concerning. This means that the Elan board must stick to its recommendation for the transaction, even if it were to believe at some point that the offer from Royalty Pharma had become compelling."

J.P. Morgan, together with its affiliate J.P. Morgan Cazenove, BofA Merrill Lynch, together with its affiliate Merrill Lynch International, and Groton Partners are acting as financial advisers to Royalty Pharma. Capitalized terms used but not defined in this announcement have the meaning given to them in Royalty Pharma's Revised Offer Document dated 23 May 2013. 

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