NEW YORK (AP) -- Irish drugmaker Elan Corp. PLC said Friday it will start a $1 billion "Dutch auction" repurchase of its stock.
Elan said the stock buyback should begin on Tuesday. The price range will be $11.25 to $13 per share. Elan recently agreed to sell its share of the rights to the multiple sclerosis drug Tysabri to Biogen Idec Inc., its marketing partner on Tysabri, and it will finance the stock repurchase with some of the proceeds.
In a Dutch auction, shareholders can decide how many shares they want to tender and at what price within a specified range. Based on that information, the company then determines the lowest price per share within the range that lets it buy the amount of shares that it wants.
U.S.-traded shares of Elan climbed 84 cents, or 7.3 percent, to $12.30 in aftermarket trading. The stock rose 4 cents to $11.46 during the day.
Elan and Biogen developed Tysabri together and have split earnings from the drug since 2004. In February, Elan agreed to sell its stake in Tysabri to Biogen for $3.25 billion in cash along with royalty payments on future sales. It also plans to refinance its debt and make investments to diversify its assets. Earlier this week, Elan said it would return 20 percent of its Tysabri royalties to shareholders through biannual special dividends.
Elan said a U.S. antitrust review of the Tysabri transaction ends on Friday. It expects the deal to close in the next few weeks.