Royalty Pharma has increased its offer for Elan, the Irish pharmaceutical business, to up to $12 a share with the launch of a formal takeover bid for the developer of multiple sclerosis drug Tysabri.

The unsolicited tender, at a variable price dependent on the outcome of an imminent Elan share buyback, values Elan at up to $7.3bn. It comes ahead of a deadline in May imposed by the Irish Takeover Panel for a bid from the US-based partnership, which buys rights to drug royalties.

It will add fresh pressure on the Elan board to respond to the proposal, and on the company’s investors to choose whether to accept the certainty of Royalty’s cash or place faith in management to identify new biotech businesses to acquire and to successfully run them.

Pablo Legorreta, Royalty Pharma’s chief executive, told the FT he would file full takeover proposals as soon as next week, while Elan investors have 60 days to decide whether to accept his offer.

He said he had received support from “the vast majority” of the more than half of Elan investors he met recently. But he said he had found no success in speaking to senior management since February, with no reply to his latest calls and emails early on Monday ahead of announcing the formal bid.

In the absence of a chance to conduct any due diligence, his bid includes $1 a share that will be paid in future rights convertible into cash until he receives assurances from Elan’s management of the size of its continued cash holdings.

The full bid price ranges between $11.25 and $12, depending on the value at which Elan’s existing shareholders tender in a “Dutch auction” to buy back shares.

The takeover offer follows Elan’s sale earlier this year of Tysabri to its US partner, Biogen Idec, triggering a payment of $3.25bn and a share of future sales.

The company’s other leading drug, for Alzheimer’s disease, failed to meet efficacy standards during clinical trials, but Elan’s management has said it is considering acquisitions in different therapeutic fields.

Elan on Monday continued its policy of holding back from any formal recommendation on the Royalty Pharma bid. “ We have said consistently that we would give consideration to any formal proposal by any party for Elan. The board of Elan will, in line with its obligations under Irish Takeover law, promptly assess the Royalty Pharma announcement and will advise its shareholders accordingly,” it said in a statement.

Elan’s American Depository Shares dropped slightly to $11.85 during the day.

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