Rumours circulating earlier this week that Australian cancer company Mayne Pharma was set to be acquired by Hospira have proved correct, with the two companies announcing a A$2.6 billion ($2bn) transaction that will create a leader in generic injectable pharmaceuticals.

Shares in Mayne surged by more than 34% to close at A$4.16 on the Australian stock exchange. The stock had been at $3.10 before being suspended earlier this week in the buld-up to today’s announcement.

Hospira, a subsidiary of Abbott Laboratories of the USA that specialises in supplying products directly into hospitals, said the deal would double its international presence, and particularly expand its business into Europe where Mayne generated nearly half its total revenues of $803 million in the year to June 30, 2006. Hospira has annual sales in the region of $2.6 billion.

Hospira already claims the top spot in the US generic injectables market, and said Mayne’s presence in Europe, Canada and Australia strengthens its global reach, doubling ex-US sales to 30% of the company’s total revenues, while also bringing ‘an attractive marketed portfolio and strong pipeline’.

Mayne also brings manufacturing expertise in high-potency drugs such as cytotoxics, which require specialist facilities and formulation skills.

The directors of Mayne Pharma have unanimously endorsed the proposal, and shareholders will vote on it in a meeting scheduled for early December.

Hospira is paying A$4.10 for each Mayne Pharma share, a 37% premium over the latter’s average share price in the five days leading to the suspension in trading of its stock on Monday.