(Photo by Stefano Buonamici/Getty)

AstraZeneca PLC, the second-largest drugmaker in the U.K., said on Wednesday that it would pay up to $2.1 billion in cash and debt to buy the rights to respiratory drugs owned by Spanish group Almirall.

As part of the deal, AstraZeneca will pay an initial $875 million for the respiratory drugs and an additional $1.22 billion if the drugs meet certain development and sales goals. The deal is subject to regulatory approval and is expected to be completed by the end of 2014.

Covington & Burling advised AstraZeneca on the deal while British firm CMS Cameron McKenna provided legal counsel to Almirall.

Upon completion of transaction, AstraZeneca will own the rights for the development and commercialization of Almirall’s existing proprietary respiratory business. The franchise includes Eklira, a treatment for chronic obstructive pulmonary disease and pipelines of experimental therapies.

Eklira, the sales from which are expected to reach $535 million by 2018, would enable AstraZeneca to compete with its larger rival, GlaxoSmithKline Plc, which introduced its own pulmonary disease medicine Anoro in 2013. The deal with Almirall would also alleviate AstraZeneca’s struggle with expiring patent on its popular medicines.

“By combining our innovative portfolios and leveraging AstraZeneca’s global scientific and commercial capabilities, we will strengthen our ability to address the entire spectrum of care in asthma and [chronic obstructive pulmonary disease],” said Pascal Soriot, chief executive officer of AstraZeneca in a statement.

A significant number of employees are expected to transfer from Almirall to AstraZeneca, a move that Soriot said he welcomed.

For Almirall, the deal with AstraZeneca would mean more resources for it to focus on dermatology while also benefitting its application for approval from the U.S. to sell its LAMA/LABA lung drug combination.

The Covington team advising AstraZeneca was led by corporate partners Lucinda Osborne and Gregor Frizzell, with assistance from competition partner Miranda Cole, employment partner Christopher Walter and life sciences transactional counsel James Ryan.

Covington advised AstraZeneca on its $4.3 billion acquisition of half of Bristol-Myers Squibb’s diabetes business that the two companies developed together in December 2013.

The CMS team providing counsel to Almirall includes life science partners Sarah Hanson, Jens Wagner and Jorn Witt as well as corporate partner Jacob Siebert.

AstraZeneca has been growing its respiratory business as of late, acquiring Pearl Therapeutics, a Californian drug maker for lung diseases, for $1.15 billion last year.

AstraZeneca itself had been the target of a takeover attempt by rival pharmaceutical giant Pfizer. The company rebuffed Pfizer’s final $118 billion offer in May this year, saying the deal would bring “uncertainty and risk” to its shareholders and “undervalues the company and its attractive future.”

Coincidentally, on the same day that AstraZeneca announced its deal with Almirall, Pfizer Inc. said it had agreed to buy Baxter International Inc.’s vaccine portfolio and facilities in Orth, Austria, for $635 million in cash.

Kirkland & Ellis represented Pfizer on that deal while Sidley Austin advised Baxter.

The Kirkland team was led by corporate partners Jeffrey Symons, Dvir Oren and David Fox, with assistance from intellectual property partner David MacDonald, executive compensation partner Scott Price, tax partner Steven Clemens, and associates Willard Boothby and Mattias Jonsson.

Sidley’s team includes corporate partners David Zampa, Luke Valentino and Thomas Thesing; technology and IP transactions partners Jeffrey Rothstein and Joshua Hofheimer, tax partner Suresh Advani, employee benefits partners Mary Niehaus and Nicholas Turner, environmental partner Laura Leonard, antitrust and competition partners Ken Glazer and Kristina Nordlander and senior counsel Vincenzo Salvatore.

Sidley associates on the deal were: Alyse Andalman, Heather Barc, Nicola Bartholomew, Brendan Bowes, Rosanna Connolly, Angelene Duke, Patrick Harrison, Elizabeth Massaro, Yael Resnick and Matthew Stoker.