Updated from 1:17 p.m. EDT

Shares of

ChiRex

(CHRX)

surged more than 50% after

Rhodia

(RHA)

of France said Monday that it would buy the manufacturer of raw and intermediate materials for the pharmaceutical industry.

The all-cash deal calls for Rhodia, a specialty chemicals company, to give shareholders of Stamford, Conn.-based ChiRex $31.25 a share. That figure represents a 55% premium to ChiRex's closing price Friday. The deal values ChiRex at $510 million.

ChiRex finished Monday regular trading up 10 9/16, or 52.5%, at 30 11/16. Meanwhile, American depositary receipts of Rhodia closed down 7/8, or 5.4%, at 15 1/4.

Rhodia said the deal would increase its presence in the business of manufacturing pharmaceuticals and their building blocks through contracts with major drugmakers. Though Rhodia already does a small portion of its business in drugs, the company is mostly known for plastics, fibers, flavors, fragrances and industrial chemicals.

"With ChiRex, we gain an immediate leadership role in the pharmaceutical contract research and contract manufacturing services arenas," Jean-Pierre Tirouflet, chairman and chief executive of Rhodia, said in a statement.

Paris-based Rhodia was a subsidiary of the former French chemical giant

Rhone-Poulenc

, which fully owned Rhodia until it spun off a minority stake in 1998. Rhone-Poulenc has since merged with German chemical maker

Hoechst

to form

Aventis

(AVE)

After the deal is completed, the companies will form a new subsidiary,

Rhodia-ChiRex

, which will include Rhodia's life-sciences operations and all ChiRex operations.

Rhodia also recently acquired

Albright & Wilson

, a maker of phosphoric acid and other industrial chemicals.