UPDATE 1-J&J buys $1 bln stake in Elan, shares soar

* J&J gets 18.4 pct stake in Elan via issue of new shares

* U.S. group takes over interest in Alzheimer's programme

* Relationship with Wyeth to continue

* Elan shares jump 30 percent

(Adds details, background)

LONDON, July 2 (Reuters) - Johnson & Johnson (JNJ.N) is take over most of Elan Corp (ELN.I) Alzheimer's research and invest $1 billion in new Elan equity in exchange for an 18.4 percent stake in the Irish drugmaker, the companies said on Thursday.

The deal marks the end of a strategic review by Elan (ELN.N)(ELN.L) and its adviser Citigroup, following pressure from investors for change at the group, which has been burning through cash at a rapid rate.

J&J will initially commit up to $500 million to develop and commercialise Elan's experimental Alzheimer's treatment bapineuzumab and will continue Elan's existing activities with Wyeth WYE.N under their Alzheimer's immunotherapy programme.

Wyeth is the process of being acquired by Pfizer (PFE.N).

J&J said the transaction would dilute its adjusted earnings in 2009 by between 2 and 3 cents a share. Shares in Elan leapt 30 percent in Dublin. (Reporting by Ben Hirschler)