Pharmaceutical company Elan said it will return $1 billion of the proceeds from selling its stake in the multiple sclerosis treatment Tysabri to shareholders.

Earlier this month, Elan said it will move from the current 50:50 business collaboration with Biogen Idec to an upfront payment of $3.25 billion and a double digit tiered royalty structure for the MS drug.

In a stock exchange announcement, it said it will use almost a third of the $3.25 billion proceeds from that deal to buy back shares. 

The remainder will be either reinvested or used to pay down debt. Elan shares were higher in Dublin trade on the news.

''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,''' commented Elan's chief executive Kelly Martin.