Royalty Pharma raises bid for Elan to up to $7.2B

NEW YORK (AP) -- Royalty Pharma says Monday that it's raising its bid for Irish drugmaker Elan Corp. PLC to as much as $12 per share, or $7.2 billion.

Royalty Pharma, a private company based in New York, offered in February to buy the company for $11 per share, or about $6.5 billion. Elan rejected that bid.

But the value of Royalty Pharma's new bid depends on Elan's $1 billion stock buyback auction. The buyback is expected to price this week, from $11.25 to $13 per share.

The value of Royalty Pharma's bid could drop back to $11 per share if Elan pays $12.25 to $13 per share in the buyback.

Elan says it will evaluate the new bid and make a recommendation to shareholders. Shares dropped 14 11 to $11.90 in afternoon trading.

Elan and Biogen Idec Inc. jointly developed the multiple sclerosis drug Tysabri and they split earnings on sales of the drug, and Tysabri has been the source of almost all of Elan's revenue. In February Elan agreed to sell its interest in Tysabri to Biogen for $3.25 billion in cash and recurring royalty payments. Elan said it would use $1 billion of the proceeds to buy back stock. It also plans to refinance its debt and make investments intended to diversify its assets.

In March Elan said it will return 20 percent of its Tysabri royalties to shareholders through twice-a-year special dividends.