Mumbai: Takeda Pharmaceutical Co Ltd, Japan's largest drug firm, will acquire US biopharma firm Millennium Pharmaceuticals Inc for $8.8 billion, in the biggest overseas acquisition by a Japanese drugmaker.

Takeda has agreed to pay Millennium $25 per share - a 53 per cent premium over Millennium's closing share price on Wednesday.

The acquisition will give Takeda rights to Millennium's blood-cancer medicine Velcade before the patent on its best-selling Actos diabetes pill expires in 2011.

Takeda expects Velcade, which is jointly marketed in the US with Johnson & Johnson (which also markets the drug in other countries), to achieve blockbuster sales of well over $1 billion.

Developing cancer drug pipelines has been a top priority for Takedo, which has been late to step into the lucrative business. Takeda now hopes to become one of the world's top three oncology companies.

"We aim to become a global leading company in cancer treatments where unmet medical needs are great and where there will be strong business growth," Takeda president Yasuchika Hasegawa told a news conference.

Massachusetts-based Millennium, with $528 million revenue last year, also has a potential therapy for inflammatory bowel disease, which is expected to enter late stage clinical trials in late 2008 or early 2009.

The US company generated $265 million in sales last year from Velcade, which is sold in more than 85 countries.

The deal, however, is subject to majority acceptance of the offer by Millennium shareholders, the companies said in a joint statement.

The deal comes close on the heels of rival Eisai Co's $3.9 billion acquisition of cancer specialist MGI Pharma Inc.

Takeda had also last month entered into an agreement with Abbott  Laboratories to split their 50-50 joint venture TAP Pharmaceutical Products.

UBS Investment Bank and Goldman Sachs advised Takeda and Millennium, respectively.

Takeda, meanwhile, is planning to buy back up to 60 billion yen ($593 million) worth of its own shares.