Elan will buy back $1B in stock, refinance debt
NEW YORK (AP) — Irish drugmaker Elan Corp. PLC said Friday that it plans to use a $3.25 billion payment from its partner Biogen Idec Inc. to buy back $1 billion in stock, make investments to diversify its assets and refinance its debt.
The payment is coming as it reworks its collaboration with Biogen involving the multiple sclerosis drug Tysabri.
The stock repurchase means Elan will be returning a large chunk of the Biogen payment to its shareholders.
The company said in anticipation of the deal restructuring it has also been evaluating assets around the world and is "enthusiastic about the opportunities that exist."
Elan had $600 million in debt at the end of 2012, and said that debt is due in October 2019. Refinancing could reduce the company's interest payments and give it more financial flexibility.
Elan said it will share more details after the transaction closes.
U.S. shares of Elan rose 36 cents, or 3.5 percent, to $10.65 in midday trading.
Since 2000 Biogen and Elan have been partners on Tysabri and had shared profits from the drug. On Feb. 6, the companies said they were ending that arrangement. Biogen, which is based in Weston, Mass., agreed to take full ownership of Tysabri, and Elan will receive the $3.25 billion payment as well as royalties on all sales of Tysabri.
Elan says it has repaid or refinanced $1.7 billion in debt over the last few years. In doing so it eliminated debt and has cut its interest expenses nearly in half. The company made $56.6 million in interest payments in 2012.
The company sold a business to Alkermes PLC in 2011 for about $960 million in cash and stock.