Elan's other asset is a pipeline of neuropsychiatric drugs, one of which the Irish company had planned to spin off into a new company before shareholders blocked the move last month.

Perrigo makes over-the-counter drugs, nutritional products and prescription pharmaceuticals, with its main markets the U.S., Mexico, Israel and the U.K. It had fiscal 2012 sales of $3.2 billion and net profit of just under $393 million, before adjustments.

The takeover will take place via a scheme of arrangement, which requires clearance from holders of 75% of the Elan stock that is voted at a forthcoming meeting, approval from Perrigo shareholders and the go-ahead from the Irish High court, as well as normal regulatory approvals.

The new company will be listed on the New York Stock Exchange and in Tel Aviv.

Citigroup ( C) bankers including Chris Hite, Bill White and Dave Magstadt are advising Elan, alongside Davy Corporate Finance's Eugenee Mulhern, Morgan Stanley's ( MS) Colm Donlon, Ondra Partners' Michael Tory. Elan's legal advisers are A&L Goodbody and Cadwalader, Wickersham & Taft.

Perrigo's advisers include Barclays' ( BCS) Punit Mehta and Derek Shakespeare.

Written by Laura Board.

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