US drug maker AbbVie is buying its peer Pharmacyclics, which is known for its blockbuster blood cancer drug Imbruvica, enhancing its oncology portfolio.

The transaction, which is approved by the boards of both companies, values Pharmacyclics at about $21bn (£13.7bn, €18.9bn), the companies said in a joint statement. Chicago-based AbbVie will pay $261.25 per share in cash and stock, representing a 13% premium to Pharmacyclics stock's closing price on 4 March.

California-based Pharmacyclics makes Imbruvica, which is approved for the treatment of three different types of blood cancer including chronic lymphocytic leukaemia, mantle cell lymphoma and Waldenstrom's macroglobulinemia. It is the only therapy to have received three Breakthrough Therapy designations by the US Food and Drug Administration. The drug is currently approved in more than 40 countries.

The drug's sales are expected to touch $1bn in the US in 2015, according to Pharmacyclics.

"The acquisition of Pharmacyclics is a strategically compelling opportunity. The addition of Pharmacyclics' talented and innovative team will add enormous value to AbbVie," said AbbVie CEO Richard Gonzalez.

"Its flagship product, Imbruvica, is not only complementary to AbbVie's oncology pipeline, it has demonstrated strong clinical efficacy across a broad range of hematologic malignancies and raised the standard of care for patients."

As per the plan, AbbVie will conduct a tender offer to acquire all outstanding shares in Pharmacyclics. The tender offer is expected to close in mid-2015, subject to regulatory approvals and the tender of majority of Pharmacyclics shares.

After the tender offer, AbbVie will acquire all remaining shares of Pharmacyclics' common stock that are not tendered in the offer through a second-step merger.

expects to fund the transaction through a combination of existing cash, new debt and stock.