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Ireland’s Elan agrees to spin-off and list bioscience unit

Irish biotechnology company Elan Corporation plc (NYSE:ELN) said today its board of directors had green-lighted a plan to spin off its Discovery Science and Neotope Biosciences divisions into two separate companies.

The decision comes after the company sold substantially all of the assets and rights related to its Alzheimer’s Immunotherapy Program (AIP Program) to Johnson & Johnson (NYSE:JNJ) in 2009 and divested its drug formulation and manufacturing unit EDT to US Alkermes (NASDAQ:ALKS) in 2011.

The move is in line with the company’s strategy to boost its balance sheet and capital structure while developing its portfolio, Elan’s chairman Robert Ingram and CEO Kelly Martin said. With the break up, the company will align its assets, timelines and risks and returns, thus providing investors with transparency and choice as to their investment decisions, Elan added.

The company expects to book a net profit of more that USD250m (EUR203.4m) and EBITDA of over USD400m in 2013 as a result of the spin-off. Besides, it seeks to generate earnings per share of USD1.00 by 2015 through the new business structure. The post-transaction GAAP operating expenses are seen at USD300m.

The separated units will form two independent focused public companies —  Elan Corporation plc, which will comprise the company’s drugs and development portfolio, and Neotope Biosciences plc, which will focus primarily on identifying and translating targets into potential therapies for chronic degenerative and other related disease areas.

Completion of the transaction is seen by the end of 2012, subject to approval by the company’s shareholders and by holders of 2016 notes. Upon closing, Neotope Biosciences will be listed on a US exchange by the end of this year.

Elan employed Citigroup Inc (NYSE:C) and Ondra Partners as financial advisors on the transaction.


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