Ironwood Pharmaceuticals (NASDAQ: IRWD) is choosing to go the acquisition route to grow its business. On Monday, the company announced it has agreed to acquire clinical-stage biotech VectivBio Holding (NASDAQ: VECT). Investors were clearly warm to that move, as they subsequently traded up Ironwood stock by almost 4% on the day. 

Under the terms of the deal, Ironwood will pay roughly $1 billion in cash to become VectivBio's new owner. That shakes out to $17 per share, representing a hefty 42% premium over the latter's most recent closing stock price. 

Both companies concentrate on treatments for gastrointestinal (GI) disorders, so the arrangement feels sensible and synergistic. In its press release touting the acquisition, Ironwood CEO Tom McCourt described his company's asset-to-be as "an ideal strategic fit" with its business.

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Source Fool.com