Elan said last night that it has closed the sale of its 50% stake in multiple sclerosis drug Tysabri.

The move clears the way for the company to return cash to investors, spend on acquisitions and stave off an approach for the company.

Under a deal announced in February, Biogen Idec will take full ownership of the MS drug for an upfront payment of $3.25 billion plus royalties of up to 25% on future sales.

Elan has said it plans to give shareholders one-fifth of that royalty share as well as a further $1 billion from a share buyback, and spend what is left on a series of acquisitions that would effectively reinvent itself as a company.

However, US investment firm Royalty Pharma attempted a $6.6 billion approach for the Dublin-based company, in which US group Johnson & Johnson holds an 18% stake.

Elan rejected Royalty Pharma's offer and will seek approval from shareholders next week to commence its share buyback.

The company also said last night that it would redeem $600m of debt maturing in 2019.

Royalty said in February that it reserved the right to reduce its indicative approach, worth $11 per Elan share, if Elan made any share buyback or redemption.

Meanwhile, the country's Takeover Panel has said Royalty Pharma must make a firm offer by 10 May or walk away.

For Biogen, the deal boosts its MS business at a crucial time for the US company, which last month won approval from European regulators for a new pill to treat the debilitating neurological disease.

The oral drug BG-12, to be sold under the brand name Tecfidera, is one of the most highly anticipated new drug approvals for the pharmaceuticals industry in 2013, with analysts predicting billions of dollars a year in sales.