Perrigo Co, a maker of medicines sold over the counter and based in the United States, has agreed to purchase Elan Corp, an Irish drug maker for $8.6 billion in order to gain a lower tax base for its expansion internationally.
Those who hold American depository receipts of Elan will be given $16.50 ADR in stock and cash, said the two companies in a joint statement. That price is 11% over the close of the ADRs on July 26.
Buying Elan, which is based in Dublin, allows the U.S. drug maker, based in Michigan, to change its domicile to Ireland. In Ireland the corporate rate for income taxes is just 12.5%.
Elan starting looking for a buyer at the beginning of the year after another company, Royal Pharma attempted to take it over.
Perrigo markets products that are non-prescription and for nasal congestion and acid indigestion, along with generic drugs, animal treatments and nutritional supplements.
This acquisition, said company officials, will result in over $150 million of annual tax and operating expense savings on a recurring basis.
Elan was up 7.9% to $15.95 early Monday morning in Dublin trading. The ADRs at Elan have increased by 46% during 2013 to $14.93. Prior to Monday, shares of Perrigo stock was up 29% for the year to $134.23, which gives it a value on the market of more than $12.6 billion.
The new company will list its shares on both the Tel Aviv Stock Exchange and the New York Stock Exchange.
Shares of Perrigo are traded on the exchange in Israel because in 2005 it acquired the Israel-based Agis Industries Ltd, a generic drugs maker.
