Celgene to Buy Pharmion

The biotech company will pay $2.9 billion in cash and stock for Pharmion, which makes blood cancer treatments.
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Biotech firm

Celgene

(CELG) - Get Report

announced Sunday it has agreed to acquire

Pharmion

(PHRM)

for $2.9 billion in cash and stock.

Celgene, of Summit, N.J., will pay $72.00 for each share of Pharmion, a 46% premium to Pharmion shares' closing price of $49.28 Friday. During that session, Pharmion stock rallied $2.34, or 5.0%, suggesting some market participants might have caught wind of the deal in advance.

In a

press release

, Celgene said acquiring Pharmion, of Boulder, Colo., will have a negative effect on its in 2008 earnings but will have a positive impact thereafter.

Pharmion makes treatments for blood cancer, and Celgene says the acquisition "furthers Celgene¿s strategy to become a global leader in the hematology/oncology field."

The deal would give Celgene a handful of new drugs, most notably Vidaza, which treats conditions caused by abnormal blood-forming cells in the bone marrow.

Celgene will offer $25.00 in cash for each share of Pharmion common stock, along with an amount of Celgene stock that will be determined based on the performance of Celgene shares in the days leading up to the close of the merger.

The boards of both companies have approved the transaction.

Celgene shares finished Friday's session at $64.90.