US drugmaker Alexion Pharmaceuticals said it would buy Synageva BioPharma for $8.4 billion at a hefty premium to expand in the lucrative market for drugs that treat rare diseases.
Makers of drugs that treat rare diseases are seen as attractive takeover targets because of their revenue-generating potential as they typically charge high prices for their products.
With the deal, Alexion will have eight experimental rare disease drugs under its belt, including Synageva's potential money spinner kanuma.
The drug, whose marketing application is being reviewed in the US and Europe, treats a rare disease called Lysosomal Acid Lipase Deficiency, where a build-up of fatty material in the blood and liver causes unexpected complications and early death in some cases.
Kanuma is expected to touch peak sales of $603m in 2020.
Alexion's cash-and-stock offer values Synageva at $225.92 per share - more than double of Synageva's closing price of $95.87 yesterday.
The deal provides a windfall for Synageva shareholders, particularly Baker Brothers Investments, which own about 32% of the company. The firm stands to make $2.68 billion from the transaction.
Alexion's sole product on the market, Soliris, raked in $2.23 billion in 2014. The drug is the only approved treatment for two potentially fatal conditions that can damage vital organs.
The deal is the latest in a string of M&As in the healthcare sector this year.
Recent deals involving rare disease drug makers include Teva Pharmaceutical Industries' $3.5 billion purchase of Auspex Pharmaceuticals and Shire's acquisition of NPS Pharmaceuticals for $5.2 billion.
Alexion is offering $115 in cash and 0.6581 of its shares for each share of Synageva.
The deal is expected to add to Alexion's 2018 profit, while allowing $150m in cost savings in 2017, the companies said.
