Recently, Alkermes, Inc. (ALKS) announced the completion of the purchase of Elan Corporation’s (ELN) drug delivery unit, Elan Drug Technologies. The merger, announced in May 2011, was approved by the shareholders of Alkermes on September 8, 2011.
The merged entity, known as Alkermes plc, is headquartered in Dublin, Ireland. Alkermes, prior to the merger, was headquartered in Waltham, Massachusetts. Alkermes plc primarily focuses on developing therapies for treating deficiencies of the central nervous system. It boasts a diversified product portfolio and a robust pipeline. More than 1,200 people are employed by the combined company globally including over 450 people in Ireland.
Per the terms of the deal, Alkermes made a cash payment of $500 million apart from giving Elan 31.9 million of its ordinary shares. Following the closure of the deal, each shareholder of Alkermes, Inc. received one share of the merged entity for every share of Alkermes, Inc. held.
The total value of the deal stood at approximately $1.0 billion on the basis of the closing price of Alkermes, Inc. shares on September 15, 2011 (i.e. $16.52). Alkermes has a 75% stake in the combined company, the shares of which are registered in the US. The merged entity trades on the NASDAQ stock exchange.
Immediately after commencing operations at its headquarters, Alkermes plc announced a multiyear, multimillion dollar manufacturing deal with one of the top ten pharmaceutical companies across the globe. Per the terms of the deal, Alkermes will be responsible for manufacturing the company’s finished pharmaceutical product, at its facility in Athlone, Ireland.
Management at Alkermes plc expects $15 million-$20 million manufacturing revenues to be generated annually by 2016 as a result of the deal. Management of Alkermes plc believes that by establishing its footprint in Ireland it will be able to enter the market in the European Union and gradually expand operations across the globe.
Neutral on Alkermes
Currently, we have a Neutral recommendation for Alkermes for the long run. The stock carries a Zacks #2 Rank (Buy rating) for the short run.
ALKERMES INC (ALKS): Free Stock Analysis Report
ELAN CP PLC ADR (ELN): Free Stock Analysis Report
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