Biogen Idec has announced plans for a $3 billion stock repurchase programme which will involve 57 million shares, or 16% of the company's outstanding common stock.
The programme involves a modified ‘Dutch auction’ structure, which allows stockholders to indicate how many shares and at what price within the specified range of $47 to $53 they wish to tender. Discussing the buyback plan, Biogen’s chief executive James Mullen said that “with strong cash flows from two of the most important franchises in biotechnology”, the multiple sclerosis drug Avonex (interferon beta-1a) and the rheumatoid arthritis and cancer drug Rituxan (rituximab), plus its confidence in the new MS drug Tysabri (natalizumab), “we are well positioned to return value to shareholders while investing in our promising pipeline.”
Following the transaction, Mr Mullen said the firm will “maintain the capacity to pursue substantial and attractively valued external growth opportunities”. This tender offer is in addition to the 20 million shares that the company may repurchase under a previous stock repurchase authorisation.
In a research note, analysts at Robert W Baird reiterated their ‘neutral’ rating on the stock, saying that the stock repurchase programme is expected to boost Biogen’s earnings per share by 3%-5% in 2007-2010.