Japanese pharmaceutical giant Takeda has agreed to buy U.S. drugmaker Ariad Pharmaceuticals for $5.2bn, BBC News reports.

Ariad specialises in making medicines for patients with rare forms of leukemia and other rare cancers.

The takeover was approved by the boards of both companies but still needs the green light from U.S. regulators.

Takeda's offer is valued at more than 75% above Ariad's closing share price on Friday - but some analysts says a rival bid cannot be ruled out.

Cancer drugs are appealing to large pharmaceutical firms, who are prepared to pay high prices for companies with promising products in the pipeline.

This was demonstrated in August, when San Francisco-based Medivation was bought by Pfizer Inc for $14bn.

Takeda is looking for new drugs to help its future sales, with top-selling blood cancer drug Velcade likely to come up against competition from lower-priced generics this year. Patents on some of its other key products expire in 2020, meaning others can replicate the medicines.