Updated from 10:30 a.m. EDT

FoxHollow Technologies

saw its shares climb Wednesday after

Merck

(MRK) - Get Report

said it would buy an 11% stake in the Redwood City, Calif., device maker.

Merck will pay $95 million, or $29.63 a share. A Merck representative will join the FoxHollow board, increasing the number of directors to six. The stock purchase is part of a four-year agreement that expands an existing collaboration between Merck and FoxHollow to find ways to analyze plaque that clogs arteries.

The deal, which will require federal antitrust clearance, sent FoxHollow's stock up $4.84, or 17.7%, to $32.08. The stock jumped as high as $35.72, and trading was much heavier than normal. Merck's stock rose 33 cents to $42.09.

Merck first signed an agreement with FoxHollow last year to work together on identifying signs of potential heart disease. The expanded arrangement calls for Merck to pay FoxHollow $40 million over four years in return for exclusive research on certain diseases. Merck would pay more if it decides to extend the agreement.

Additionally, Merck will provide at least $60 million to FoxHollow for the next three years to pursue research on removing artery-clogging plaque from patients, conduct clinical trials and help develop drugs.

"For the first time in any pharmaceutical company's history, we have the ability to capture and evaluate atherosclerotic plaque from thousands of patients," said Peter Kim, president of Merck Research Laboratories. "Our first year of collaboration with FoxHollow has given us novel insights into cardiovascular disease, and we're very pleased to enlarge our relationship."

The new deal with Merck will help FoxHollow improve the functions of its plaque-removal device and improve FoxHollow's efforts to develop drugs to prevent the reclogging of arteries that have been cleared.

FoxHollow makes and sells a device to treat peripheral artery disease, the build-up of plaque in arteries that impairs blood flow to the legs. When the arteries are blocked, patients can experience pain, reduced mobility or even lose their limbs.