Italian pharmaceutical company Alfasigma has signed a definitive merger agreement to acquire US-based biopharmaceutical company Intercept Pharmaceuticals, for a total of $794m.

Under the terms of the agreement, the Italian drugmaker will make an offer to acquire all issued and outstanding shares of Intercept common stock, at a price of $19.00 per share in cash.

The tender offer will be closed subject to customary conditions, including the tender of the majority shares and the expiration of the waiting period under the Hart-Scott-Rodino Act.

Alfasigma will purchase all the shares that are not acquired in the tender offer through a second-step merger for the same consideration.

The proposed transaction is expected to be completed by the end of this year, after which Intercept’s common stock will no longer be publicly listed.

Alfasigma intends to finance the transaction through its available cash on hand and existing corporate credit facilities.

Alfasigma board chairman Stefano Golinelli said: “Today’s proposed acquisition is aligned with our strategy to build presence in the US market, with a focus on our core gastroenterological area while adding another important asset to our innovation pipeline.”

Alfasigma chief executive officer Francesco Balestrieri said: “The acquisition of Intercept marks another important milestone in Alfasigma’s growth path, particularly with regard to the U.S. market in which we have significant development objectives.

“Intercept represents a compelling fit with Alfasigma’s core business areas of gastroenterology and hepatology, and we believe that the transaction represents a transformational opportunity for both companies.”

Intercept develops and commercialises novel therapeutics for rare and serious liver diseases, including primary biliary cholangitis (PBC) and severe alcohol-associated hepatitis (sAH).

Its lead candidate Ocaliva (obeticholic acid) is a farnesoid X receptor agonist approved in the US and several other markets for the treatment of primary biliary cholangitis (PBC).

Also, Ocaliva plus ursodeoxycholic acid (UDCA) is approved to treat PBC in adults who are not responsive to UDCA, or as monotherapy for adults who are unable to tolerate UDCA.

The proposed acquisition of Intercept will expand the Italian drugmaker’s gastrointestinal and hepatology portfolio and strengthen its presence in the US market.

PJT Partners served as exclusive financial advisor, and Sullivan & Cromwell and Chiomenti Studio Legale as legal counsel to Alfasigma, on this transaction.

Barclays and Centerview Partners served as financial advisors, and Skadden, Arps, Slate, Meagher & Flom as legal counsel to Intercept.

Intercept president and chief executive officer Jerry Durso said: “We are pleased to announce this transaction with Alfasigma, which delivers significant value to shareholders.

“Importantly, it recognizes the value of our portfolio, R&D and commercial capabilities and our talented people across the organization.

“The team at Intercept is proud of the breakthrough, innovative work that we have done as a pioneer, delivering life-saving medicine to patients with rare and serious liver diseases such as PBC.”