Shares in Mylan Laboratories have surged after the firm announced a massive $1.25 billion dollar stock buyback programme.

The buyback equates to around 25% of the firm’s outstanding stock, or just shy of 49 million shares, and the deal will involve a modified “Dutch auction” self- tender, through which Mylan will pay $18 to $20.50 per share, followed by a $250 million stock repurchase programme “on the open market or otherwise.”

Chief executive, Robert Coury, said the “buyback properly creates the right balance between doing what is right for our business and delivering value to our shareholders,” adding that its “sheer magnitude” will enhance the impact to earnings per share. Mylan will pay for the buyback with cash on hand and $775 million from a $975 million financial commitment from backers, notably Merrill Lynch.

The timing of the repurchase is significant in that comes just after billionaire investor Carl Icahn reiterated his offer to buy the firm for $20 per share [[03/06/05d]]. He originally tried to buy Mylan at the end of last year just as the firm was itself trying to acquire King Pharmaceuticals for $4 billion [[22/11/04b]]. That deal fell through a few months ago [[28/02/05b]], but the Mylan board is not keen on Mr Icahn’s proposal and the buyback is likely to keep existing shareholders happy.

Mylan also announced that it intends to license out its new hypertension treatment nebivolol, which was recently granted an approvable letter by the US Food and Drug Administration [[02/06/05f]]. Final approval is contingent upon satisfying additional requirements regarding certain aspects of the pre-clinical data conducted by Janssen Pharmaceutica, the company from which Mylan licensed the US and Canadian rights.

The firm also noted that it will close its Mylan Bertek subsidiary and will transfer responsibility for selling its products to Mylan Pharmaceuticals and UDL units as a cost-cutting measure. Finally on a busy day for the company, Mylan said that it expects adjusted 2006 earnings per share of $0.92 to $1.15, on revenues of between $1.14 billion and $1.34 billion.