Japan's Takeda to buy U.S. cancer drug maker Ariad in $5.2 billion deal

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[January 09, 2017]  (Reuters) - Japan's Takeda Pharmaceutical Co Ltd said on Monday it would buy cancer drug maker Ariad Pharmaceuticals Inc in a deal valued at $5.20 billion, to beef up its oncology pipeline.

Logos of Japanese Takeda Pharmaceutical Co are seen at an office building in Glattbrugg near Zurich March 7, 2012. REUTERS/Arnd Wiegmann/File Photo

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 for $14 billion.

Takeda's negotiations to acquire Valeant Pharmaceuticals International Inc's 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.

(Reporting by Natalie Grover and Ankur Banerjee in Bengaluru; Editing by Shounak Dasgupta)

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