Perrigo Company Plc, the manufacturer of generic drugs and over the counter medicines targeted by activist investor Starboard Value LP, is exploring a sale of the royalties from its multiple sclerosis drug Tysabri, people familiar with the matter said.
The royalty divestment is one of the actions that Starboard called for on Monday when it disclosed a 4.6 percent stake in the company and complained about its sagging stock price.
Perrigo had been exploring selling Tysabri royalties before Starboard’s proposals, the people said on Friday. Royalty Pharma, a privately held company that specializes in acquiring drug royalties, is one of the potential acquirers, the people added.
There is no certainty that the process will lead to a sale, they said.
The sources asked not to be identified because the matter is not public. Perrigo declined to comment, while Royalty Pharma did not immediately respond to a request for comment.
In a letter to the Dublin-domiciled company on Monday, Starboard also asked for a sale of its prescription pharmaceutical business.
Perrigo’s Chief Financial Officer Judy Brown said at a Bank of America healthcare conference on Thursday that the company’s strategic portfolio review was under way to decide which assets are non-core and could be divested.
“The one asset that we can comment on that is non-core by a fairly objective definition is our Tysabri royalty stream, but it is a fantastic contributor to the overall financial performance and financial metrics of the business. But a royalty is not in and of itself a core business per se,” Brown said.
Brown would not comment on any talks Perrigo was having with other companies over the royalties but said the universe of possible buyers comprised “one strategic and a bunch of financial buyers.”
Perrigo acquired the rights to Tysabri when it purchased Elan Corp in 2013 for $8.6 billion.
Tysabri is marketed through a partnership with Biogen Inc. It paid more than $300 million in royalties to Perrigo last year and could be worth around $2.8 billion in a sale, according to an analyst note this week from RBC Capital Markets.
Selling Tysabri would significantly reduce Perrigo’s debt burden but would also slash earnings per share by as much as $2.25, the note added.
Last year, Perrigo convinced its shareholders that they would be better off refusing a $205-per-share cash-and-stock offer from rival Mylan Inc. Perrigo now trades at around $93 per share.
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