Elan rejected Royalty Pharma's increased $6.4 billion bid on Thursday, shortly after the U.S. firm cut the acceptance bar for its latest offer to 50 percent plus one share.
Royalty raised its hostile cash bid to $12.50 per share on Monday, from $11.25 previously, but made the new offer conditional on Elan shareholders rejecting at a meeting due to be held on June 17 the series of defensive transactions recently announced by the Irish drug firm.
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Royalty, which had said on Monday it reserved the right to reduce the acceptance threshold from 90 percent, has described Elan's efforts to reinvent itself through a series of acquisitions and debt deals as hasty and ill-conceived.
Elan fought back after its board met to discuss the revised bid on Thursday and said the offer continued to grossly undervalue the company and its future prospects, and urged shareholders to take no action.
"This offer is no more than an opportunistic attempt to acquire our company at a substantial discount at our shareholders' expense," Elan chairman Bob Ingram said in a statement.
"Put simply, for Royalty Pharma to win, you our shareholders must lose."
Elan rejected the previous bid, which it described as a "nuisance," and is determined to keep its independence by plotting its own fresh course. It announced its second major drug deal inside a week on Monday.
Elan sold its 50 percent interest in Tysabri, a multiple sclerosis drug, to U.S. partner Biogen Idec in February for $3.25 billion plus royalties of up to 25 percent, and used the proceeds to reward investors through a share buyback and to fund its spending spree.
It agreed to buy two private drug firms this week, quickly following on from a separate $1 billion deal announced last week to buy 21 percent of the royalties that U.S. company Theravance receives from GlaxoSmithKline (GSK) .
Royalty, which buys royalty rights on patented drugs, is keen to add lucrative revenues from Tysabri to its stable of streams that includes rheumatoid arthritis drugs Humira and Remicade.
While Royalty said it is offering a 42 percent premium to the $3.25 billion Elan sold its interest in Tysabri for, Elan believes it is not properly valuing the drug and told shareholders on Thursday that they risked losing out substantial future income if they accepted Royalty's offer.
(Editing by Greg Mahlich)