Irish drugmaker Elan Corp. PLC said Thursday it had completed its “Dutch auction” stock repurchase, buying back $1 billion in stock for $11.25 per share.
Elan said in March that it would buy the shares for $11.25 to $13 each. Under the modified Dutch auction, stockholders notify the company how many shares they’d like to sell and at what price within the announced range. The company reviews the offers and determines the lowest share price within its range that would enable it to buy back the shares it wants.
Elan said that a vast majority of the shares tendered at the $11.25 strike price came from a single corporate shareholder that it did not identify. Separately, New Jersey-based Johnson & Johnson said it had sold 82 million U.S. shares of Elan back to Elan for $11.25 each as part of the Dutch auction. J&J said it will record a gain of $213 million during the second quarter.
The strike price for the buyback will affect the value of U.S.-based Royalty Pharma’s attempt to buy Elan.
Royalty Pharma, a private company that buys royalty interest in drugs and late-stage drug candidates, offered in February to buy Elan for $11 per share, or about $6.5 billion. On Monday, it indicated it would be willing to pay as much as $12 per share if the strike price were between $11.75 and $12 per share.
Royalty Pharma said it would match the strike price if the final result was $11.25 per share, which means its offer is worth about $6.7 billion. Elan shares rose a penny to $11.90 in trading on Thursday.
Elan gets almost all its revenue from the multiple sclerosis drug Tysabri, which it developed with Biogen Idec Inc. In February, Elan agreed to sell its interest in Tysabri to Biogen for $3.25 billion in cash and recurring royalty payments.
Elan used $1 billion of payment to buy back the shares, and it also plans to refinance its debt and make investments intended to diversify its assets.
In March Elan said it will return 20 percent of its Tysabri royalties to shareholders through twice-a-year special dividends.