NEW BRUNSWICK, N.J. (AP) – Johnson & Johnson said Thursday it will buy Cougar Biotechnology Inc. for about $894 million in cash in a move to bulk up its cancer drug portfolio.

New Brunswick, N.J.-based J&J said it will pay $43 per share for the Los Angeles-based biopharmaceutical company, representing a 16 percent premium to Cougar’s closing price Thursday of $36.98.

Based on Cougar’s 20.8 million shares outstanding, the deal would be worth $894 million. J&J said that including Cougar’s cash on hand, the transaction is worth about $970 million.

Cougar Biotechnology has drugs in development for the treatment of prostate cancer, breast cancer and the plasma-cell cancer multiple myeloma. J&J markets the drug Velcade for multiple myeloma, and has applied for approval of trabectedin for treating relapsed ovarian cancer. The health care and consumer products company also makes a test that rapidly detects the spread of breast cancer to surrounding lymph nodes.

Both companies’ boards have approved the deal, which is expected to close in the third quarter. Upon closing, the transaction is expected to trim Johnson & Johnson’s 2009 earnings per share by about 2 cents to 3 cents.

Cougar will work with Ortho Biotech Oncology Research & Development, a unit of J&J’s Centocor Research & Development Inc. division. Cougar is currently conducting two late-stage trials on experimental prostate cancer treatment abiraterone acetate. The disease accounts for 10 percent of cancer-related deaths in the United States, the company said.

Cougar earlier this month reported a wider first-quarter loss of $23.3 million on higher research and development costs related to the potential prostate cancer treatment.

The deal marks J&J’s latest move in its strategy to fill out its pipeline through acquisitions. It recently snapped up cosmetic product and breast implant maker Mentor Corp. for $1.07 billion and Omrix Biopharmaceuticals Inc., which makes sealants used to control bleeding during surgery, for $438 million. It also has purchased SurgRx Inc., which develops advanced tissue-sealing products.

J&J shares closed earlier down 39 cents at $54.99. Cougar shares finished the regular session up 62 cents at $36.98, and jumped $5.72, or 15.5 percent, to $42.70 in after-hours trading.

Copyright 2009 The Associated Press.