A public announcement that it had hired Citigroup Inc. to seek strategic alternatives helped Irish drugmaker Elan Corp. plc spark the process that led to its $1.5 billion deal with Johnson & Johnson, announced on July 2.

"The fact that [Elan] made the announcement at the J.P. Morgan Healthcare Conference helped them meet a lot of people at once," says a source close to the deal, referring to Elan's January announcement in San Francisco. The move resulted in immediate meetings with interested parties. "In a more normal process, it can take weeks to arrange the meetings," the source adds. "But they were all at the conference, which was very helpful."

J&J will invest $1 billion in Elan by buying an 18.4% stake in the drug developer and also invest $500 million for a 50.1% stake in a new company the two will form after the deal's closing to take over Elan's Alzheimer's disease research efforts.

The deal came together over a six-month stretch, as various suitors, including Bristol-Myers Squibb Co., H. Lundbeck A/S and Biogen Idec Inc., sought a way to tap Elan's drug pipeline. Elan, for its part, was looking for a way to fund its research efforts while also managing some $1.4 billion in corporate debt coming due over the next few years. To that end, Elan will use the J&J investment primarily to pay off that debt.

One source says that structuring the deal was complicated because it is essentially two separate deals that are contingent on each other. "The scope of each was different," the source says, noting that the share purchase of Dublin-based Elan is effectively a European corporate governance matter, as J&J is buying Elan's American Depositary Receipts, while creating the new company to house Elan's Alzheimer's drugs is more a straightforward acquisition from J&J's point of view.

The source adds that it was to J&J's advantage to bolster Elan with its capital infusion, considering that the Irish company is now a 49.9% owner in the drug research business. "It does make sense to know, when you're acquiring a program, that your second-biggest shareholder is stable," the source says.

Elan turned for financial advice to Citi's healthcare team, led by Chris Hite and including Dave Magstadt, Joseph Mooney, Mark Shafir and Bill White. Hite had worked with Elan before, as a healthcare banker at Lehman Brothers Inc. Elan had hired Lehman, along with Goldman, Sachs & Co., in July 2008 to help it conduct an auction for its drug delivery unit. The company abandoned that effort when the credit crisis made it unlikely that a buyer could be found. Hite moved to Citi after Lehman Brothers Holdings Inc.'s bankruptcy, bringing the Elan relationship with him.

For legal advice, the company turned to Irish law firm A&L Goodbody, whose team was led by Julian Yarr. In the U.S., Elan used Cahill, Gordon &
Reindel LLP's Christopher Cox and John Papachristos.

J&J, as usual, used its own deal team, led by Tom Heyman and Patrick ­Verheyen. The company turned for legal advice to Arthur Cox attorneys Geoff Moore and Brian O'Gorman. The company also tapped longtime legal adviser Cravath, Swaine & Moore LLP, whose team included George Zobitz, Damien Zoubek, Eric Hilfers and Joseph ­Zavaglia. J&J also received legal advice from Weil, Gotshal & Manges LLP lawyers Steven Newborn and John ­Sipple Jr.