Japanese-based Nichi-Iko Pharmaceutical has entered a definitive agreement to acquire US injectables maker Sagent Pharmaceuticals for approximately $736m.

The acquisition is expected to close in the second quarter of Nichi-Iko’s fiscal year ending March 2017 and will take place through an all-cash tender offer, followed by a second-step merger.

Nichi-Iko Pharmaceutical has created US acquisition subsidiary Offeror to carry out the all-cash tender offer.

Once the tender offer is completed, Nichi-Iko will merge Offeror with Sagent, which will then become the wholly-owned subsidiary of Nichi-Iko as a result.

"Both companies share a deep commitment to brand differentiation, product quality, and broad-based business creativity."

Nichi-Iko president and CEO Yuichi Tamura said: “The combination will give us the opportunity to strengthen our international competitiveness, leverage our production capacity over a wider range of products, and accelerate development of our biosimilars business.”

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The deal will bring the two companies together in the generics market, thereby creating significant growth opportunities for each business.

The acquisition will help Nichi-Iko raise its profile both in the domestic and international generics market.

Sagent, on the other hand, will benefit from Nichi-Iko’s portfolio of biosimilars under development, as well as the company’s injectable products, thereby expanding its business in the US market.

Sagent Pharmaceuticals CEO Allan Oberman said: “We are very pleased to be joining together with Nichi-Iko, Japan’s generic pharmaceutical leader, which has a proven track record of business growth and generic market expertise.

“Both companies share a deep commitment to brand differentiation, product quality, and broad-based business creativity.

“The combination will maintain Sagent’s current operations and valued employees, while providing accelerated expansion of our product offerings and accessibility to a robust pipeline of biosimilar pharmaceuticals.”

Upon completion of the acquisition, Sagent will also gain access to Nichi-Iko’s manufacturing infrastructure and quality control systems that would enable the company to produce more high-quality, cost-effective generic medicines for its customers.