Elan Corp (ELN) Initiates New Dividend Program; Will Be Tied to Tysabri Performance

March 4, 2013 7:09 AM EST
Get Alerts ELN Hot Sheet
Price: $18.12 --0%

Rating Summary:
    0 Buy, 9 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 23 | Down: 34 | New: 34
Trade ELN Now!
Join SI Premium – FREE
The Board of Elan Corporation, plc (NYSE: ELN) (the Company) has approved the decision to initiate a unique cash dividend policy enabling its shareholders to benefit directly from the long term cash flow generated by Tysabri.

The dividend program will be directly linked to Tysabri market performance calculated as a percentage of the Tysabri royalty paid to Elan from Biogen Idec (Nasdaq: BIIB) as a result of the recently announced Tysabri restructuring. The initial percentage to be paid out directly to shareholders is 20% of those royalties.

There is no cap to the dividend cash payments that will be generated from this direct link between shareholders' equity and the long term cash flow of Tysabri. This dividend structure gives shareholders the right to enjoy unlimited participation in the upside from the Tysabri sales increase which we anticipate for the future.

The Company expects to pay these cash dividends to its shareholders in twice-yearly instalments. The first dividend is expected to be paid in the fourth quarter of 2013, subject to the closing of the recently announced Tysabri restructuring. Payment of the dividends will be made in accordance with applicable law, including, where applicable, shareholder approval.

According to the restructured Tysabri collaboration, Elan will receive 12% royalties on in-market sales of Tysabri in the first year from closing and thereafter 18% royalties on in-market sales up to $2.0 billion, and 25% royalties on sales exceeding $2.0 billion. In 2012 in-market sales of Tysabri were $1.6 billion.

Kelly Martin, the CEO of Elan, stated “As announced on February 6, the restructuring of the Tysabri collaboration with Biogen Idec enables us, upon close, to unlock value to the direct benefit of our public shareholders. These value creation initiatives consist of three related but distinctive components: a $ 1 billion dollar share repurchase program, a highly efficient cash dividend that directly links shareholders to the long term performance and cash flow generation of Tysabri and lastly, the addition of specific business assets which will allow for diversification across molecules, therapeutic areas and geographies.”

Mr Martin commented further, “This provides Elan and our shareholders significant near and longer term benefits. We continue to make tangible progress on a variety of corporate development discussions and other strategic developments and anticipate providing further clarity to the marketplace in the coming days and weeks.”

The Directors of Elan accept responsibility for the information contained in this announcement. To the best of their knowledge and belief (having taken all reasonable care to ensure such is the case), the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.

Any holder of 1% or more of any class of relevant securities of Elan or of Royalty Pharma may have disclosure obligations under Rule 8.3 of the Irish Takeover Panel Act, 1997, Takeover Rules 2007 (as amended).

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In

Related Categories

Downgrades, Hot Dividends

Related Entities

Dividend, Stock Buyback

Add Your Comment