France's Vivalis is buying Austrian vaccines specialist Intercell in a deal the firms say will result in the "creation of a European biotech leader".

The transaction, described by the companies as a merger of equals, will see stockholders of the Vienna-headquartered firm receive 13 Vivalis new ordinary shares for 40 Intercell shares, representing a 31.7% premium based on the average stock price over the last three months. The deal values Intercell at around 125 million euros.

The new entity, which will be renamed Valneva, will be 55% owned by Vivalis shareholders while Intercell backers will hold 45%. Shortly following completion of the merger, Valneva intends to launch a rights issue, and 40 million euros has already been secured.

Vivalis is best-known for its EB66 cell line, derived from duck embryonic stem cells, which is licensed to pharma and biotech companies for the production of treatments, including vaccines and monoclonal antibodies. Intercell already has a vaccine on the market, Ixiaro to prevent Japanese encephalitis, but has suffered a number of clinical setbacks in the last couple of years.

Intercell's pipeline consists of a Pseudomonas aeruginosa vaccine (Phase II/III), a candidate against infections with C. difficile (Phase I) as well as numerous investigative programmes using the company's IC31 adjuvant, including a tuberculosis vaccine in Phase II.

Valneva will have a combined cash balance of 94 million euros and is looking at cost synergies of 5-6 million euros a year within two years following completion of the merger. Intercell chief executive Thomas Lingelbach, who will hold the same role with Valneva, said "our strategy is to build a sustainable biotech…by combining Vivalis’ discovery and technology capabilities with Intercell’s development, manufacturing and commercialisation expertise".