Elan has announced a deal to sell its Elan Drug Technology unit in Athlone for almost $1 billion to US biotechnology firm Alkermes.
The deal will see Elan keep a 25% shareholding in the Athlone business and the $960m deal is made up of $500m in cash, the rest in shares. The business will be called Alkermes plc.
The business in Athlone employs 450 staff and Ireland will become Alkermes' European headquarters.
The move will cut Elan's debt pile by two thirds and will make it a pure biotechnology firm.
Elan's chief executive, Kelly Martin, said Alkermes is committed to maintaining staff levels in Athlone, and he said the move is a positive one for Elan's shareholders as it reduces the company's debt and improves its capital structure.
Elan's stake in the new group will be subject to a lockup arrangement. EDT will be merged with Alkermes and the combined group is expected to have revenue in excess of $450m a year from 25 products, including treatments for bipolor disorder and schizophrenia, and adjusted core profit of $80m.
Elan said it expects the deal to be immediately accretive to cash earnings. The transaction is subject to approval by Alkermes' shareholders and US authorities. It is expected to close during the third quarter of this year.
Richard Pops, currently chairman, president and CEO of Alkermes, will serve as Alkermes Plc's chairman and chief executive. Shane Cooke, currently executive vice president and head of EDT, will join Alkermes Plc as president.
'This transaction aggressively advances a number of long-standing strategic and financial objectives for Elan,' commented the company's CEO Kelly Martin.
'The combination of Alkermes and EDT is a strong strategic fit at the right time when both businesses are strong and positioned for growth,' commented Shane Cook, head of EDT.
'This combination creates opportunities for our employees and provides a platform for future growth,' he added.
Alkermes CEO Richard Pops has said the new owners of the Elan Corporation are looking forward to increasing employment levels from the existing number of 400 at the drug delivery plant in Athlone which they have purchased.
After a meeting with staff at the Elan plant in Athlone this afternoon Mr Pops said it was fair to say that the new owners would sustain employment levels and pursue new developments at the company that will lead to additional jobs in Athlone
The IDA welcomed the agreement between Alkermes and Elan.
The IDA says Alkermetes' expertise in formulation and neuroscience fits neatly with Ireland's capabilities, and IDA looks forward to engaging with the company both in Ireland and overseas.
Elan shares closed up 2.2% to stand at €5.59 in Dublin this evening.
