The two companies have been in partnership to develop drugs since 2004

AstraZeneca said it aims to "establish a major international presence in the research and development of biological therapeutics" in a statement.

CAT uses human antibodies in the development of new drugs, by looking at gene sequences.

CAT's board has also given the go-ahead for the transaction.

This latest deal follows a strategic development alliance between the two firms dating back to November 2004.

AstraZeneca, Europe's third-biggest drug maker, paid £75m to acquire just under 20% of CAT back then.

Jointly the two companies agreed to invest £100m across 25 new drug projects.

CAT has developed, among others, a drug for treating rheumatoid arthritis called Humira.

Cat shares were trading at 796.5 pence when markets closed on Friday, meaning the firm was worth £420m.

This latest transaction represents a 67% increase on that price.

In March, AstraZeneca issued first quarter profits of $2.04bn (£1.2bn), a 38% increase on last year's first quarter.

Buying spree

This deal follows a wave of acquisitions by AstraZeneca over the past year.

It paid £121m when it bought Cambridge-based biotech firm Kudos Pharmaceuticals, as well as agreeing a deal worth up to £173m with US firm Targacept for treatments for both Alzheimer's disease and schizophrenia.

And in November AstraZeneca signed an agreement for the licensing of septic shock treatment CytoFab from UK rival Protherics for £195m .

In March it agreed to pay $200m to American group Abraxis BioScience to get the right to jointly promote its Abraxane cancer therapy.