(Reuters) - Japan's Takeda Pharmaceutical Co Ltd (T:4502) said on Monday it would buy cancer drug maker Ariad Pharmaceuticals Inc (O:ARIA) in a deal valued at $5.20 billion, to beef up its oncology pipeline.
Ariad stock was up 74.7 percent at $23.98 in premarket trading.
Takeda has agreed to pay $24 in cash for each Ariad share, a premium of about 75 percent to its Friday close.
Ariad's leukemia drug, Iclusig, which is expected to generate sales of $170 million-$180 million in 2016, came under fire in October for "staggering" price increases.
A U.S. Food and Drug Administration decision on its lung cancer treatment brigatinib, which is being touted as a potential blockbuster, is expected by April 29.
Cancer treatment is a target for many large drugmakers, with high prices being paid for promising assets, such as Medivation, which was bought by Pfizer Inc (N:PFE) for $14 billion.
Takeda's negotiations to acquire Valeant Pharmaceuticals (NYSE:VRX) International Inc's (TO:VRX) Salix stomach-drug business have stalled over price disagreements, Reuters reported in November, citing people familiar with the matter. http://reut.rs/2jkIbd9
The Ariad deal, which Takeda plans to fund by taking on $4 billion in new debt as well as existing cash, is expected to close by the end of February.
Ariad had long-term debt of about $522 million as of Sept. 30, according to a regulatory filing.
The equity value of the deal, which is expected to add to Takeda earnings in 2018, is $4.66 billion, according to Reuters calculations.