DUBLIN (Reuters) - Irish drugmaker Elan closed the sale of its 50 percent stake in multiple sclerosis (MS) drug Tysabri on Tuesday, clearing the way for it to return cash to investors, spend on acquisitions and stave off an approach for the company.
Under a deal announced in February, Biogen Idec will take full ownership of the blockbuster drug for an upfront payment of $3.25 billion plus royalties of up to 25 percent on future sales.
Elan plans to give shareholders one-fifth of that royalty share as well as a further $1 billion from a share buyback, and spend what is left on a series of acquisitions that would effectively reinvent itself as a company.
However, U.S. investment firm Royalty Pharma attempted a $6.6 billion approach for the Dublin-based company, which U.S. group Johnson & Johnson holds an 18 percent stake in.
Elan rejected Royalty Pharma’s offer and will seek approval from shareholders next week to commence its share buyback. The company also said on Tuesday that it would redeem $600 million of debt maturing in 2019.
Royalty said in February that it reserved the right to reduce its indicative approach, worth $11 per Elan share, if Elan made any share buyback or redemption.
For Biogen, the deal boosts its MS business at a crucial time for the U.S. company, which last month won approval from European regulators for a new pill to treat the debilitating neurological disease.
The oral drug BG-12, to be sold under the brand name Tecfidera, is one of the most highly anticipated new drug approvals for the pharmaceuticals industry in 2013, with analysts predicting billions of dollars a year in sales.
Reporting by Padraic Halpinm editing by G Crosse