Irish drug maker Elan to spend $1bn for share buyback. Photo: flickr/bradley j

Irish drug maker Elan is paying back its shareholders about one third of the money it is due to receive from the sale of its stake in multiple sclerosis treatment Tysabri to partner Biogen Idec.

The cash-rich company will return $1bn (€760m, £660m) to shareholders through share repurchase. It also plans to refinance its debt and to seek promising acquisitions.

Earlier in February, the company agreed to a deal to sell its stake in the joint venture with US-based Biogen Idec for $3.25bn and future royalty payments. The partnership was over a multiple sclerosis drug called Tysabri.

"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 ... We have been making significant progress in this regard and are prepared to move expeditiously, upon close, on the redeployment of capital," CEO Kelly Martin said in a statement.

Following the closing of the deal, the company said it will initiate a share buyback programme, the details of which will be disclosed later.

The move enables "a significant portion of the unlocked value of Tysabri to be returned to shareholders, directly," according to the company.

The company said it will also invest a portion of the money into a variety of business assets that will "diversify Elan from a product, science/clinical, therapeutic, and geographic point of view." In addition, Elan will refinance its outstanding debt.

"By unlocking a portion of the Tysabri asset value while retaining a significant earnings' upside we have a unique opportunity to reward shareholders, diversify our business and create a highly distinctive business platform, upon which to advance to the benefit of shareholders and patients around the world," Martin added.

For 2012, Elan's earnings before interest, tax and depreciation, including Tysabri, were up 13 percent to $220m, on sales of $1.2bn.