Shares of Allergan closed nearly 2 percent higher on Wednesday after the pharmaceutical company announced it would buy drug developer Vitae Pharmaceuticals in an all-cash deal for about $639 million.
The Ireland-based company said it would acquire Pennsylvania-based Vitae for $21 a share, a 159 percent upside from its Tuesday close of $8.10 a share. The deal is expected to close by the end of this year.
Allergan, producer of the anti-wrinkle Botox drug, said the purchase would strengthen its skin care product line.
"Vitae's novel Contour drug discovery platform and its team, which have been instrumental in the discovery of novel 'difficult to drug' compounds, will be highly complementary to Allergan's existing R&D discovery efforts in key therapeutic areas," David Nicholson, Allergan's chief research and development officer, said in a statement.
As of Tuesday's close, Vitae had a market cap of about $233 million. The shares surged 157 percent Wednesday to close at $20.85 a share.
Five-day performance
With Wednesday morning's gains, Vitae shares are up about 15 percent for the year so far, while Allergan stock is still about 20 percent lower over that time.
In April, new U.S. Treasury rules to curb tax inversions resulted in U.S. drugmaker Pfizer terminating its $160 billion agreement to acquire Allergan.
— Reuters contributed to this report.