UPDATE 1-Biogen Idec announces $3 billion share buyback

(Adds details, company comment, background, stock activity)

LOS ANGELES, May 29 (Reuters) - Biogen Idec (BIIB.O) on Tuesday said its board has authorized a $3 billion share repurchase through a modified "Dutch Auction" tender offer of about 57 million shares, or 16 percent of the company's outstanding common stock.

In a statement, Biogen Idec said the buyback would help it return value to shareholders while allowing it to invest in its drug pipeline.

Big pharmaceutical companies have been snapping up smaller companies with promising products as they gird for patent expirations on blockbuster drugs.

"Following this transaction, Biogen Idec will maintain the capacity to pursue substantial and attractively valued external growth opportunities," James Mullen, the company's chief executive officer, said in a statement.

The Cambridge, Massachusetts-based company said it has limited debt and a core business, anchored by products like cancer treatment Rituxan and multiple sclerosis drug Avonex, which generate substantial cash flow.

Beginning on Wednesday and ending June 26, shareholders can tender some or all of their stock for not less than $47 or more than $53. The modified "Dutch Auction" structure of the offer will allow shareholders to indicate how many shares and at what price within the specified range they wish to tender.

If completed, the stock repurchase will be funded through a combination of up to $1.5 billion cash and up to $1.5 billion of debt.

Last week, Biogen Idec's share and option activity surged on renewed takeover speculation. Shares, which hit a 52-week high of $52.72 on Dec. 1, closed at $49.21 on the Nasdaq on Tuesday.