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Alkermes aims at ‘Big Biotech’ status with Elan buyout

Posted on 07 July 2011


Xconomy examines Alkermes' new company strategy in the wake of its acquisition of Elan Drug Technologies. The EDT buyout, explains Luke Timmerman, gives the biotech a steady revenue flow to build on with some prospective upside from products like Bydureon. 

By limiting its borrowing to $450 million, says CEO Richard Pops, the company obtained good terms and a shot at an early payback. "Leveraging a [money-losing] biotech company is reckless, but leverage for a cash-flow positive and stable company is prudent balance sheet management," Pops says.

There are tax implications to this deal. Alkermes considered the value of being incorporated in a country where corporate income taxes are 12.5 percent, compared to a 38 percent combined federal and state tax rate.

Read the full report at Xconomy


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