Elan Corp has confirmed that it has rejected Royalty Pharma's $11.25 per share acquisition bid, saying it does not come close to what the Irish drugmaker is worth.

Last week, Royalty lowered its bid for Elan from an earlier offer that could have gone as high as $12, depending on the pricing of a $1 billion share buyback by the Dublin-based firm. The US company had urged Elan stockholders to tender their shares at around the $12 mark but its appeal fell on deaf ears.

Johnson & Johnson accounted for 92.3% of all shares repurchased and sold at $11.25. The result of the buyback was seen by most observers as a vote of confidence in the firm's current management and chairman Robert Ingram issued a statement saying that the Royalty offer "grossly undervalues Elan's current business platform and our future prospects".

He added that the board "unanimously and without reservation rejected the offer". The decision was taken after "careful review and consideration" by management and with the assistance of outside financial and legal advisors.

There is a chance Royalty may come back with a bigger offer but most analysts see this as unlikely. Earlier this year, Elan sold its stake in the multiple sclerosis blockbuster Tysabri (natalizumab) to partner Biogen Idec for $3.25 billion, plus royalties and the company said it planned to use some of the cash to pursue "strategic transactions".

Observers are keenly waiting for news as to what type of acquisitions Elan is looking at and are hoping the company may reveal more when it announces first-quarter financials on Thursday (April 25).