Pfizer to acquire Medivation for $14 billion

US pharmaceutical giant Pfizer announced Monday that it will acquire Medivation for about $14 billion, besting Sanofi and other large drug companies that had sought the biotech firm's lucrative cancer treatments.

The all-cash deal brings Pfizer the hit medication Xtandi, which generated $2.2 billion in revenues over the last year in treating advanced metastatic prostate cancer.

The transaction, agreed by both companyies' boards, will also bring to Pfizer other late-stage drugs under development at San Francisco-based Medivation.

Medivation has been working with Japanese company Astellas to develop other applications for Xtandi, including for breast cancer and the common liver cancer hepatocellular carcinoma.

"The proposed acquisition of Medivation is expected to immediately accelerate revenue growth and drive overall earnings growth potential for Pfizer," said Ian Read, Pfizer chairman and chief executive.

Medivation founder and chief executive David Hugh called Pfizer "the ideal partner to extend the reach of our blockbuster Xtandi franchise and take our promising, late-stage assets -? talazoparib and pidiluzimab ?- to their next stages of development."

Shares of Medivation surged 19.8 percent to $80.48 a share in mid-morning trade, compared to the $81.50 per-share valuation in the deal. Pfizer rose 0.8 percent to $35.26.

The transaction appeared to end a contest for Medivation among the world's top drugmakers. France's Sanofi launched the frenzy with a $9.3 billion bid in April, which was turned down.

Sanofi raised its offer to $10 billion, and threatened a hostile takeover campaign, but was again turned down by Medivation in July, which called the a deal "not in the best interests" of its shareholders.

But Sanofi remained in the game at that point, when Medivation agreed to share confidential data with the French company, indicating it thought that would demonstrate it was worth significantly more.

At least one other potential suitor, Amgen, also had an agreement to review Medivation's data. Others reportedly eying the company included Gilead and Celgene.

- Sanofi bows out -

On Monday Sanofi suggested it would not boost its bid to challenge Pfizer.

"While we recognized the potential strategic benefits of a combination with Medivation, we are first and foremost a disciplined acquirer and remain committed to acting in the best interests of Sanofi shareholders," it said.

Sanofi said it remained determined to "reshape our portfolio, strengthen our position in oncology, deliver outstanding launches and sustain innovation in R&D."

The purchase comes on the heels of Pfizer's $5.2 billion acquisition in May of California biotech company Anacor Pharmaceuticals, a specialist in eczema treatment.

Pharma has been a hot sector as far as merger activity and many analysts expect that trend to continue. Drivers include expiring patents of bestselling drugs and the need of some smaller biotech companies for financing to maintain research programs.

BMO Capital Markets listed seven candidates as potential takeover targets, including BioMarin Pharmaceutical and Intercept Pharmaceuticals.

"Given the scarcity of mid-cap biotech, we believe the remaining companies could see increasing interest, as large biopharma continues to look towards biotech as a source of growth," said BMO.

Pfizer has been an aggressive and not always successful architect of large deals over the last couple of years. AstraZeneca in 2014 rejected a Pfizer bid of about $116 billion after a lengthy unsolicited courtship.

Pfizer in April terminated a proposed $160 billion merger with Allergan after the US Treasury set new rules designed to block cross-border deals that are structured to avoid US taxes.