Perrigo Co. will acquire Elan Corp. for $8.6 billion in cash and stock ($6.7 billion excluding Elan’s cash on hand). The acquisition has been unanimously approved by both boards of directors of Perrigo and Elan and is expected to close by the end of 2013. The companies will be combined into a new company incorporated in Ireland, Elan’s base, and will be led by Perrigo’s current leadership team. Keeping Ireland as the new company’s base will help reduce its corporate tax rate. The combination is expected to result in more than $150 million of recurring after-tax annual operating expense and tax savings, and will include layoffs of redundant staff.

“Through this transaction, Perrigo establishes a diversified platform for further international expansion,” stated Perrigo’s chairman and chief executive officer, Joseph C. Papa. “We believe this transaction is compelling for Elan shareholders and fully takes into account the value of Elan’s assets, including a large cash balance and a double-digit royalty claim on Tysabri, a blockbuster product that generated revenues of $1.6 billion last year and has been growing at a compound annual growth rate of 19%. We believe the combination of Perrigo and Elan will create an industry-leading global healthcare company with the balance sheet liquidity and operational structure to accelerate our growth and capitalize on international market opportunities.”

Robert A. Ingram, chairman of Elan, commented, “This is an excellent transaction for Elan shareholders and provides them with cash consideration as well as the opportunity to benefit from the potential upside value of the new company. Joe Papa and his team have demonstrated exceptional capability and delivery of results in building a premier healthcare company over the past number of years. We have the confidence in Joe and his leadership team to continue to grow and expand its presence on a global scale.”

After the transaction closes, Perrigo shareholders are expected to own approximately 71% of the combined company while Elan shareholders are expected to own approximately 29%.