Forest Laboratories is to buy Aptalis for about $2.90 billion, expanding its presence in the gastrointestinal and cystic fibrosis markets.

Privately-held Aptalis, which had sales of $688 million in the year ended September 2013, was previously known as Axcan Pharma before being bought by private equity firm TPG in 2008 for some $1.3 billion. For the cash, Forest is getting two therapeutic franchises that are complementary to the firm - GI in North America and CF in Europe, "advancing our strategy to create blockbuster therapeutic areas,” said chief executive Brent Saunders.

He added that "because there is such a strong fit, we expect to grow the sales of products from both Forest and Aptalis while realising $125 million in cost synergies from combining the two companies". The acquisition is expected to add nearly $700 million in revenues.

The deal has gone down very well with investors and Forest shares climbed 18% to close at  $69.30. The acquisition is the first for Mr Saunders, who took over from long-standing CEO Harold Solomon in October and it is hoped that the deal will help soften the blow caused by the loss of patent protection on the antidepressant blockbuster Lexapro (escitalopram).