By RTT News, February 22, 2013, 06:36:00 AM EDT
(RTTNews.com) - Ireland-based biotechnology firm Elan Corp. Plc ( ELN ) Friday said it would initiate a share repurchase program of $1 billion after completing the restructuring of its Tysabri collaboration with U.S.-based biotechnology company Biogen Idec Inc. ( BIIB ).
It was announced earlier this month that Elan would move from the current 50:50 business collaboration to an upfront payment of $3.25 billion and a double digit tiered royalty structure for the life of the complete Tysabri asset.
The company will utilize a portion of the $3.25 billion upfront payment for investing in a variety of business assets. Elan will also refinance its outstanding debt.
Elan said details of the share repurchase program would be detailed after the transaction closes. Additionally, the upfront cash payment to Elan will have little to no tax burden.
Elan said a portion of the $ 3.25 billion will be invested into a variety of business assets. These assets will diversify Elan from a product, science/clinical, therapeutic, and geographic point of view. Expecting the Tysabri restructuring, the company has spent time evaluating assets globally.
Elan will also refinance its outstanding debt. The firm has worked closely with the credit markets over the past ten years. Details of the refinancing will be announced after the close of the Tysabri restructuring.
According to the company, its Board of Directors, executive management and key advisors have been working on a possible restructuring of the Tysabri relationship for years. The unlocking of a portion of the Tysabri asset value provides the firm with significant strategic flexibility.
Kelly Martin, CEO, said, "Understandably, many market participants are looking forward to further clarity around how we intend to deploy the significant upfront payment we will be receiving from Biogen Idec upon the close of our transaction. The goal of this communication is to provide additional information to our investors."
The stock is up 3.3 percent in Dublin at 7.9 euros.
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