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Royalty Pharma Chairman Writes Open Letter To Elan Board

Stocks in this article: ELN

NEW YORK, June 17, 2013 /PRNewswire/ -- Royalty Pharma announced today that Rory Riggs, Chairman and Co-Founder of the Royalty Pharma group, is sending the following open letter to the Board of Directors of Elan Corporation, plc (NYSE:ELN):

To the Board of Directors of Elan Corporation:

As you know, Elan's shareholders appear poised to decisively reject the Theravance Transaction and AOP Transaction at today's EGM*.  By rejecting what we believe were hastily-arranged, value-destructive transactions, Elan shareholders are sending you a clear message rejecting your "strategic plan" for Elan.  Your shareholders want you to maximize shareholder value and they want you to do it now.

Given this clear message from your shareholders, I was disappointed that you and your advisers rejected our advisers' efforts to engage with you this past weekend regarding a potential negotiated transaction structured, subject to any required consent of the Irish Takeover Panel, as a recommended scheme of arrangement. 

A scheme of arrangement has the potential to allow the contingent value right ("CVR") included in our Further Increased Offer to become transferable, which many of your shareholders have told us would make our offer even more attractive.

We welcome that you are now contemplating a sale of Elan but urge you to engage with Royalty Pharma today, rather than undertaking a lengthy, and we think likely fruitless, effort to find a buyer willing to offer more than we are.

We believe Elan's shareholders should view your announcement of a sale process, and the likelihood that any such sale process will yield a better offer than Royalty Pharma's, with some skepticism for a number of reasons, including:

  • As a result of Royalty Pharma's announcement of its interest in Elan in February 2013, Elan has effectively been for sale for almost four months.  If there were other bona fide buyers who were interested in acquiring Elan, one would expect them to have emerged publicly in that time.  If none have emerged in that time, it is most likely because no other bona fide buyer is interested, at least not at a price higher than Royalty Pharma is offering;
  • Your announcement of a sale process comes very near the end of the period our offer is permitted to remain open and appears to us to be designed primarily to discourage Elan shareholders from tendering into our offer;
  • In light of Elan's response to date to our offer – a complete refusal to engage with Royalty Pharma coupled with the proposal of a series of what we believe were hastily-arranged, value-destructive transactions, the two most significant of which your shareholders appear poised to decisively reject today, resulting in millions of dollars of break and transaction fees** – we lack confidence that Elan will conduct its sale process in a fair manner or with a realistic price objective;
  • There can be no assurance that any proposal to acquire Elan that comes out of this sale process will actually be presented to Elan shareholders; and
  • Given that Royalty Pharma's offer of $13 plus an up to $2.50 CVR has been deemed 'grossly inadequate' by Elan, there can be no assurance that Elan will not conclude that all other offers they receive are 'grossly inadequate'.

Time is short.  We believe that our offer is the best alternative for Elan's shareholders now and will remain the best alternative upon completion of Elan's sale process.

We urge you to do the right thing by your shareholders and engage with us before our offer expires***.

We look forward to hearing from you.

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