Dublin-based biotech Elan in July agreed to a takeover bid from US drug maker Perrigo in a deal worth $8.6 billion. The buyout gives Perrigo a royalty stream from Tysabri (natalizumab), a blockbuster multiple sclerosis drug developed by Elan. The deal also allows Perrigo to move its domicile from Allegan, Michigan, to Ireland, where there is a comparatively lower corporate tax rate. That bonus likely drove the acquisition, says Eric Schmidt, an analyst with Cowen Group in New York. “Elan is not worth the price that Perrigo is paying,” Schmidt says. “So I have to believe that Perrigo is willing to pay the higher price because of the tax benefit.” Perrigo, the largest maker of generic drugs for major US retailers, will likely see its tax rate drop from 30% to the high teens, according to the company. Elan positioned itself for an acquisition earlier this year when it sold much of its stake in Tysabri to its partner, Biogen Idec in Weston, Massachusetts. Biogen paid Elan $3.25 billion for the full rights to the drug and agreed to pay royalties on sales. “Elan said it would reinvest the proceeds [from the Tysabri sale] and investors were uncomfortable with that,” says Cowen. “That put a lot of pressure on them to be sold.” Elan's board in May rejected a bid from Royalty Pharma for $13 cash per share plus $2.50 more contingent upon Tysabri sales milestones. Perrigo's bid gives Elan's shareholders $6.25 in cash and 0.076 of a Perrigo share for each Elan share. Elan shareholders are expected to vote on the acquisition by the end of the year.