Updated from 9:34 a.m. EDT

Mylan Laboratories

(MYL) - Get Report

says preliminary results of its large stock buyback proposal suggest that Carl C. Icahn will sell most of his shares in the company.

On Monday, Mylan's shares dropped 76 cents, or 3.9%, to $18.64. One hour after markets opened, more than 2.2 million Mylan shares had been traded. The average daily trade is 2.06 million shares,

This past weekend, Mylan reported that an initial count indicates it had met its goal of repurchasing $1 billion in stock. Mylan expects pay $19.50 a share for nearly 51.3 million shares tendered by investors, representing 19% of its common shares.

As for Icahn, the company's largest shareholder, Mylan said it had received a tender offer of almost 26.3 million shares at or below a price of $19.50 per share.

"While the exact identity of the shareholder responsible for this tender has not been disclosed, the company is aware that entities controlled by Carl Icahn" filed documents with the

Securities and Exchange Commission

on Nov.1 "that reported ownership of approximately the same number of shares," Mylan said.

Mylan expects to purchase about 94%, or 24.7 million shares, from the as-yet unnamed investor. Mylan is paying for 94% because the buyback was oversubscribed, so the company is repurchasing shares from all investors on a prorated basis.

Some analysts had predicted Icahn would sell some, but not all, of his Mylan shares.

By holding on to some shares, he can still press his case that Mylan's directors be replaced by a slate of directors that he nominated. The directors will be chosen at the company's annual meeting in late October.

If Icahn sells most of his shares, it's unclear whether he will pursue his offer of paying $20 a share for the rest of Mylan's stock. Mylan's board has rejected his offer. It is also unclear if and when Icahn would try to sell his remaining shares.

Icahn has built up his stake in Mylan, reaching a peak of 9.8%, since the company made a bid for

King Pharmaceuticals

( KG) 12 months ago.

Icahn opposed the deal, which was cancelled in February, and has kept up his attack on the company's strategy and management.

Mylan announced plans for a stock buyback last month, setting a price range of $18 to $20.50 and choosing the best price that would enable it to achieve its buyback goal. Mylan also plans to repurchase another $250 million in stock on the open market after the auction is completed.

Analysts have put Icahn's cost basis for his Mylan shares at $17.46 a share. Mylan's stock closed at $17.70 on June 13, the day before the buyback was announced, and at $19.40 on Friday.

Icahn's involvement with Mylan is a near duplicate of his campaign at oil company

Kerr-McGee

(KMG)

, which recently completed a Dutch auction of its own at a price that was well above market. In both cases, Icahn effectively brow beat management into investor-friendly actions including the buybacks and discouraged potentially dilutive acquisitions.

Icahn threatened a proxy battle for board representation at both companies before each borrowed heavily to finance their buybacks. Mylan repeatedly said its decision to launch the Dutch auction was not prompted by Icahn. At Kerr-McGee, an Icahn lawsuit predated the auction.