Elan Corp (ELN) Could Be Worth $19 in a Takeout - Jefferies
Tweet
Share
E-mail
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: 13 | Down: 14 | New: 11
Rating Summary:
0 Buy, 9 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Join SI Premium – FREE
Jefferies boosted its price target dramatically on takeover target Elan Corp (NYSE: ELN) from $14 to $19, while reiterating their Buy rating. The firm seeks to answer the 4 main questions on the minds of investors: (1) Who is going to buy ELN? (2) What is the price? (3) How long will the process take? and (4) Will a transaction actually get done?
Analyst Corey Davis comments:
"On Friday, management indicated that they had received "expressions of interest" in a potential acquisition of the company and commenced a formal sales process (explicitly inviting Royalty Pharma into the fold). Recent mgmt commentary suggested that they were amenable to a sale in the $15-$20 range, and our valuation work suggests that ELN is worth closer to the higher end of that range, but only for a high taxpaying suitor capable of leveraging ELN's unique corporate infrastructure. Our detailed DCF analysis (pgs. 3-4) supports a $19 takeout price ($16 on a fundamental basis).
Our $1.5B (~$3/sh) estimate for ELN's corporate tax infrastructure is admittedly somwhat arbitrary, as the full value potentially realized by an acquirer depends on a number of factors (i.e. size, how much assets/IP can be moved, current tax situation, etc). We screened pharma/biotech companies in the $5B-$50B market cap range that we think could make strategic sense to acquire ELN and narrowed it down to a shortlist of seven names: Allergan (NYSE: AGN) (Hold), Regeneron (NASDAQ: REGN) (Hold), Vertex (NASDAQ: VRTX), Alexion (NASDAQ: ALXN (Hold), Zoetis
(NYSE: ZTS) (Buy), Mylan (NYSE: MYL), and Perrigo (NASDAQ: PRGO). We are sure there are more and this is not an exhaustive list, but we think it's a start."
Explaining the new $19 price target - up $5 from its prior target - the analyst notes, $2 is attributable to removal of ELN-only overhead expenses, and an add'l $3 relates to our estimate of what ELN's corporate tax structure is worth to potential suitors.
For an analyst ratings summary and ratings history on Elan Corp click here. For more ratings news on Elan Corp click here.
Shares of Elan Corp closed at $13.49 yesterday.
Analyst Corey Davis comments:
"On Friday, management indicated that they had received "expressions of interest" in a potential acquisition of the company and commenced a formal sales process (explicitly inviting Royalty Pharma into the fold). Recent mgmt commentary suggested that they were amenable to a sale in the $15-$20 range, and our valuation work suggests that ELN is worth closer to the higher end of that range, but only for a high taxpaying suitor capable of leveraging ELN's unique corporate infrastructure. Our detailed DCF analysis (pgs. 3-4) supports a $19 takeout price ($16 on a fundamental basis).
Our $1.5B (~$3/sh) estimate for ELN's corporate tax infrastructure is admittedly somwhat arbitrary, as the full value potentially realized by an acquirer depends on a number of factors (i.e. size, how much assets/IP can be moved, current tax situation, etc). We screened pharma/biotech companies in the $5B-$50B market cap range that we think could make strategic sense to acquire ELN and narrowed it down to a shortlist of seven names: Allergan (NYSE: AGN) (Hold), Regeneron (NASDAQ: REGN) (Hold), Vertex (NASDAQ: VRTX), Alexion (NASDAQ: ALXN (Hold), Zoetis
(NYSE: ZTS) (Buy), Mylan (NYSE: MYL), and Perrigo (NASDAQ: PRGO). We are sure there are more and this is not an exhaustive list, but we think it's a start."
Explaining the new $19 price target - up $5 from its prior target - the analyst notes, $2 is attributable to removal of ELN-only overhead expenses, and an add'l $3 relates to our estimate of what ELN's corporate tax structure is worth to potential suitors.
For an analyst ratings summary and ratings history on Elan Corp click here. For more ratings news on Elan Corp click here.
Shares of Elan Corp closed at $13.49 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Stripe, Advent In Talks To Buy Paypal - WSJ
- Phillips 66, Marathon Merger Talks Collapsed - Semafor
- Star Equity to acquire Harte Hanks for $5 per share in cash and stock
Create E-mail Alert Related Categories
Analyst Comments, Hot Comments, Mergers and Acquisitions, RumorsRelated Entities
Jefferies & CoSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
