J&J looks to knock $100m off Elan price

Johnson & Johnson is trying to knock down the price of an 18.4 per cent stake in Irish biotech group Elan Corp after a US judge said the terms of the deal breeched an earlier agreement.

The US healthcare giant agreed in July to pay $1bn for the stake in Elan, as well as an additional $500m for a majority stake in the Irish company’s pipeline of potential Alzheimer’s treatments.

However, Johnson & Johnson is understood to be seeking to cut at least $100m of the price of the equity stake after a US federal court ruled earlier this month that the deal breaches the equal partnership agreement between Elan and another biotechnology group, Biogen Idec.

The court’s decision followed a complaint by Biogen that Johnson & Johnson would gain a degree of control over Biogen, and an effective option to take control of one its leading drugs, multiple-sclerosis treatment Tysabri, should the company ever be acquired. Elan and Biogen jointly own Tysabri, which generates almost $1bn in revenues each year.

Had the US court not intervened, Johnson & Johnson would have had the right to finance a buyout of Biogen’s 50 per cent stake in Tysabri.

The restructuring of the deal with Johnson & Johnson will come as a blow for Elan, a company that specialises in neurological treatments. Its board has been under pressure from shareholders to seek partnerships after its share price fell dramatically earlier this year. Its shares have been lifted by news of the Johnson & Johnson deal.