Zoetis Inc. (ZTS), a top animal healthcare company, plans to buy veterinary diagnostics company Abaxis Inc. (ABAX) in a $2.0-billion deal, the companies announced today.

New Jersey-based Zoetis, which has more than $5 billion in annual revenue, is aiming for a larger market share in the veterinary diagnostics services industry, which is currently a small portion of its total sales. It expects Abaxis, which provides tools to detect animal diseases, will add to its earnings by next year.

“This acquisition brings Zoetis a company that has a proven, competitive diagnostic platform for growth that we can help to accelerate in the U.S. and worldwide with our global scale and direct customer relationships in approximately 45 countries," Zoetis CEO Juan Ramon Alaix said in a statement.

Abaxis drew 83%, or $201.9 million, of its annual revenue in fiscal 2018 from diagnostics products.

Abaxis Shares Rally 15%

Abaxis stock was up about 15% in premarket trading and trading was briefly halted on the news, with Zoetis easing down 1.2%. Abaxis shares are up more than 71% the past year and up 66% year to date.

In a deal funded by cash and new debt, Zoetis plans to pay $83 per share of Abaxis' outstanding stock, which represents a 15.7% premium over the stock’s closing price on Monday. The deal is expected to close by the end of the year.

Zoetis shares are up nearly 37% in the past year. The company is a result of a spinoff from Pfizer, which sold its majority stake in the business in 2013. (See also: How Stock Investors Can Profit Big From Spinoffs.)

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