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.

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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.”

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.