Emergent Biosolutions Inc. took another step in its quest to expand its pipeline and ramp up commercial revenues by sealing a deal to acquire Canada’s Cangene Corp. for $222 million, or $3.24 per share on a fully diluted basis. The boards of directors of both companies approved the transaction, which gives Emergent three specialty products included in the U.S. Strategic National Stockpile and four commercial specialty therapies.

Emergent said the transaction, financed through a combination of cash reserves and a debt financing from Bank of America Merrill Lynch, PNC Bank and J.P. Morgan Chase Bank NA, is expected to be accretive in 2014, exclusive of transaction-related costs. Emergent reaffirmed its full year 2013 GAAP guidance for total revenues of $300 million to $310 million and net income of $25 million to $30 million. The company also expects to realize approximately $35 million of cash from Cangene at closing.

Emergent has Biothrax (anthrax vaccine adsorbed), the only FDA-licensed vaccine available for pre-exposure protection against anthrax infection, and the chemical decontaminant RSDL, an FDA-approved lotion for removal or neutralization of chemical warfare agents from the skin, which it gained in August in its acquisition of the Healthcare Protective Products Division of Bracco Diagnostics Inc. The Rockville, Md.-based company also has four anthrax candidates in various stages of clinical development and the oncology asset otlertuzumab, which is in a Phase II program in chronic lymphocytic leukemia.

The company has made no secret of its goal to grow and diversify its revenue mix and accelerate earnings. In November 2012, Emergent disclosed a three-year plan that called for exceeding $500 million in annual product revenue, achieving a three-year compound net income growth rate of greater than 15 percent and securing diversified revenues from at least three marketed specialty products. The company was already on that trajectory, last month reporting third quarter revenues of $89.1 million, compared to $66.6 million for the same period in 2012, and nine-month revenues of $214.6 million, compared to $187.3 million during the first nine months of 2012.

Cangene, based in Winnipeg, Manitoba, brings to the table a biodefense business consisting of three medical countermeasures targeting botulinum, smallpox and anthrax, each with a multi-year U.S. government contract. They include BAT (botulism antitoxin (equine) heptavalent), Vigiv (vaccinia immune globulin intravenous (human)) and Aigiv (anthrax immune globulin intravenous).

Cangene also has four FDA-licensed, hospital-based specialty therapeutics targeting infectious diseases, hematology and transplantation. They include Winrho SDF (rho[D] immune globulin intravenous [human]), Hepagam B (hepatitis B immune globulin [human] injection), Varizig (varicella zoster immune globulin [human]) and Episil. Cangene’s commercial product revenue for its fiscal year ending July 31 was approximately $44 million.

In addition, Cangene has manufacturing and plasma collection facilities in Winnipeg, fill/finish contract manufacturing facilities in Baltimore and a U.S. sales and marketing team, which could come in handy to moving some of Emergent’s products into commercialization. Emergent projected the combined firm will generate pro forma total revenues of more than $430 million and pre-tax operating income of approximately $55 million.

Cangene’s products and facilities complement, rather than compete, with Emergent’s operations, according to Dan Abdun-Nabi, Emergent’s president and CEO. “Every deal has a life of its own,” Abdun-Nabi told BioWorld Today. “As we talked with the senior people at Cangene, it just made an awful lot of sense in terms of our core competencies and their capabilities, their product portfolio and their contracts with the U.S. government. The discussions just took off from there.”

Although the transaction is structured as a Canadian court-approved plan of arrangement, with completion subject to approval by 66 2/3 percent of the votes cast by Cangene shareholders, the deal is likely to sail to completion in the first quarter of 2014. Emergent has agreements in place with shareholders who control approximately 61 percent of Cangene’s outstanding common shares (TSX:CNJ) and agreed irrevocably to support the transaction. They’ll bank some bucks; Cangene’s shares closed Thursday at the offering price of C$3.42 apiece, up 26.7 percent, a 52-week high.

Emergent’s shares (NYSE:EBS) gained $1.14, to close at $22.45.

The next step for Emergent is to consolidate the operations of the combined company. Abdun-Nabi was short on specifics, noting on a conference call late Wednesday that the company has not decided whether or how many of Cangene’s 500 employees might be affected in the transition.

In the meantime, the deal gives Emergent some maneuvering room in active partnering talks on otlertuzumab as the Phase II program continues.

J.P. Morgan analyst Cory Kasimov wrote in a research note, “We view this as a good deal for EBS, given that it will diversify its biodefense business, while also bringing [four] approved specialty pharmaceuticals to its biosciences business. There is also the potential for synergy with Biothrax by bringing its fill/finish in house.” Kasimov reiterated an “overweight” rating and increased Emergent’s price target to $29.