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Johnson & Johnson will take over most of Elan Corp.'s Alzheimer's research and invest $1-billion (U.S.) in new Elan equity in exchange for an 18.4 per cent stake in the Irish drugmaker, the companies said on Thursday.

The deal marks the end of a strategic review by Elan and its adviser Citigroup, following pressure from investors for change at the group, which has been burning through cash at a rapid rate.

J&J will initially commit up to $500-million to develop and commercialise Elan's experimental Alzheimer's treatment bapineuzumab and will continue Elan's existing activities with Wyeth under their Alzheimer's immunotherapy programme.

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Wyeth is the process of being acquired by Pfizer.

J&J said the transaction would dilute its adjusted earnings in 2009 by between 2 and 3 cents a share. Shares in Elan leapt 30 per cent in Dublin.

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