Perrigo Company (PRGO), Elan Corporation, plc (ADR) (ELN): Will This Be the Next Irish Biotech Acquisition?

If you consider that Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ) could likely be acquired for far less than $8.6 billion, I think it would be a better buy than Elan. With Elan, Perrigo Company (NYSE:PRGO) has to wait for sales of Tysabri to exceed $2.5 billion to earn its 25% royalty, which could be five more years. Until then, Perrigo receives about 15% of sales. Therefore, Jazz’s $680 million in revenue produces significantly more top-line performance than Elan’s Tysabri, and provides the same tax benefit. Furthermore, Jazz’s pipeline should add greater top-line performance over the next several years.

Final thoughts

So, who will purchase Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ)? Fortunately, I think any mid or large cap biotech company based in the U.S. might be interested. Royalty Pharma initially comes to mind due to its attempt to purchase Elan. However, Forest Laboratories, Inc. (NYSE:FRX), with an operating margin of (2.75%) and $3.1 billion in revenue, was also considered in the Elan bidding war. Moreover, Mylan Inc. (NASDAQ:MYL) could also seek Jazz to jump-start growth and increase profitability.

Overall, there are countless companies that might find Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ)’s 12.5% tax rate and its product line to be attractive. Over the last five years, Jazz has increased by 1,000%, and in my opinion, that performance will increase in the coming months as speculation might lead to an eventual acquisition.

Brian Nichols has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Will This Be the Next Irish Biotech Acquisition? originally appeared on Fool.com.

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