Bottom Line: Right prescription for all parties

JOE PAPA’S maths may leave something to be desired – he said yesterday the Perrigo-Elan tie-up was a case of one plus one making at least three – but his dealmaking can’t be faulted. 

 

After waiting in the wings while Royalty Pharma repeatedly threw itself at the Irish biotech group, Papa yesterday revealed himself as Elan’s perfect suitor – offering a 10 per cent premium to Friday’s closing price and, by some analysts’ calculations, an offer worth a fifth more than Royalty’s best.

 

So what’s in it for Papa? As well as the revenue from MS treatment Tysabri to use as he pleases, the main draw is the opportunity to bring the bulk of Perrigo’s income under Ireland’s much more competitive tax regime. Perrigo’s investment is a compelling argument for the country’s attractive tax rate, particularly after Actavis played a similar hand in May by buying Dublin-based Warner Chilcott. It certainly gave a boost to perennial takeover target Shire, which moved its tax base from the UK to Ireland in 2008, and whose shares rose 2.36 per cent yesterday as investors bet it could be next. 

 

So everyone’s a winner – but none more so than Elan boss Kelly Martin. Martin took charge at the firm 10 years ago when its shares were worth just $2, piling resources into Tysabri and doggedly fighting off Royalty’s advances. Kelly will step down once the deal completes. He deserves the world’s nicest carriage clock when he goes.