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.