UPDATE 1-Elan offers Tysabri dividend after Royalty approach

(Writes through)

* Elan offers "unique" dividend on top of share buyback

Royalty Pharma made $6.6 bln approach last week

By Padraic Halpin

DUBLIN, March 4 (Reuters) - Irish drugmaker Elan said it will give shareholders 20 percent of the royalty rights for multiple sclerosis drug Tysabri in a bid to stave off an approach for the company by U.S. investment firm Royalty Pharma .

New York-based Royalty made its $6.6 billion approach last week, just two weeks after Elan announced it had sold its 50 percent interest in Tysabri for $3.25 billion plus future royalty payments to U.S. partner Biogen Idec.

Elan said on Monday that the "unique" cash dividend policy would give shareholders the right to enjoy unlimited participation in the upside from Tysabri sales and comes on top of its decision to return $1 billion to shareholders.

(Reporting by Padraic Halpin; Editing by David Holmes)