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By Padraic Halpin
DUBLIN (Reuters) - U.S.-based Royalty Pharma has dropped a hostile bid worth up to $8 billion for Elan <ELN.I>, leaving the Irish drug maker free to seek other suitors having put itself up for sale last week.
Royalty <ROYPH.UL> on Tuesday withdrew its appeal against a ruling by Ireland's regulator on takeovers, meaning the offer automatically lapses and bringing an end to a bitter, four-month battle that involved court hearings, injunctions and a war of words between the two sides.
The end of that saga heralds a new takeover battle for Elan, which has invited bids and has interest from "more than one interested party," according to a source familiar with the situation.
Under Irish Takeover Panel rules, Royalty is not permitted to submit another hostile bid for Elan for 12 months once its current offer lapses. Elan has said Royalty can take part in the sale process. Royalty did not say if it intended to do so and a spokesman for the company had no further comment.
The New York-based investment firm had made its offer contingent on Elan shareholders rejecting all resolutions put to a vote at a meeting on Monday, but the owners narrowly backed one of the proposals, for a share buyback.
Royalty had said its bid should be contingent on only two of the resolutions relating to acquisitions - both of which were rejected - but the Irish Takeover Panel had said it could not modify the terms at that stage of the takeover contest.
Royalty subsequently appealed against this ruling, a move which it has now dropped.
"Royalty Pharma announced today that it had withdrawn its request for a judicial review of the Irish Takeover Panel's decision requiring it to lapse its offer for Elan Corporation," it said in a statement.
Elan, which rejected a third increased bid last week, has fended off Royalty, but shareholders have wrecked its original plan to spend the proceeds of a major drug sale on a string of acquisitions.
The Dublin-based firm set out on a spending spree last month after selling its 50 percent interest in multiple sclerosis drug Tysabri to U.S. partner Biogen Idec <BIIB.O> for $3.25 billion plus royalty rights.
But its owners overwhelmingly rejected a proposed $1 billion royalties deal with U.S. company Theravance Inc <THRX.O>, the purchase of private drug firm AOP Orphan and a drug spin-off aimed at cutting operating costs.
The Theravance deal, which would have given Elan 21 percent of the royalties the U.S. firm is due to receive from GlaxoSmithKline (GSK) <GSK.L> for its respiratory drugs, was rejected by 72 percent of shareholders.
Its agreed purchase of Austrian rare drug specialist AOP Orphan for 263.5 million euros ($351.7 million) was voted down by a similarly wide margin. By contrast, just 50.1 percent of shareholders supported the buyback.
Even before those votes, Elan kicked off its sale process on Friday, having said days earlier that it had received expressions of interest from other parties.
Royalty's bid had offered $13 in cash per share as well as a "contingent value right" that could add a further $2.50 per share if blockbuster drug Tysabri hit certain sales milestones.
Elan shares were 0.2 percent lower at 10.06 euros by 7:50 a.m. ET.
(Additional reporting by Sam Cage; Editing by Greg Mahlich and David Holmes)