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UK drug firm Shire to buy US rival in $5.2bn deal

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Image caption Shire is known primarily as a maker of drugs to treat rare diseases

UK pharmaceutical company Shire has clinched a deal to buy US biotech firm NPS Pharmaceuticals for $5.2bn (£3.4bn).

Shire said the deal would strengthen its position in the lucrative field of medicines for rare diseases.

The boards of both firms have already approved the deal, which is expected to add to Shire's earnings from 2016.

The agreement comes two months after a takeover deal for Shire from US firm AbbVie fell through.

"The acquisition of NPS Pharma is a significant step in advancing Shire's strategy to become a leading biotechnology company," said Shire's chief executive Flemming Ornskov.

"This is about growth and rare diseases, and it fits hand in glove with our strategy and our franchise," he added.

Shire is paying $46 (£30) a share in cash for NPS, which specialises in drugs for gastrointestinal disorders.

The amount represents a 51% increase to the price NPS's shares were trading at on 16 December, when speculation of a potential deal first emerged.

Shire said in October it would look at potential deal prospects after AbbVie abandoned its its plans to take over the UK firm.

AbbVie's interest in Shire was driven by an opportunity to dramatically reduce its tax bill, as it would have enabled the US firm to shift its tax base to the island of Jersey, where corporate taxes are lower.

However, a change in US tax rules, aimed at curbing such tax advantages, made the acquisition less attractive.

The deal, the first major corporate acquisition of 2015, is expected to be complete by the end of the first quarter this year.

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