Regeneron has agreed to repurchase $5 billion of its stock from Paris-based Sanofi, the companies said on Monday. Regeneron said that Sanofi also plans to sell approximately 12.8 million shares, a holding worth more than $7 billion based on Friday’s closing price. That will mark the largest public equity offering in the heath-care industry on record.

The announcement is part of Chief Executive Officer Paul Hudson’s revamped strategy. The drugmaker said in December that it would end its hunt for new diabetes and heart disease medicines, helping save more than $2 billion, and focus on lucrative areas such as oncology. The transaction will boost Sanofi’s war chest for acquisitions to $50 billion, according to Bloomberg Intelligence’s Sam Fazeli.

“We believe the proceeds from this transaction will help further our ability to execute on our strategy to drive innovation and growth,” Hudson said in a statement.

Sanofi’s decision to sell comes after Regeneron’s stock surged 57% in the past six months. The French drugmaker holds about 23.2 million Regeneron shares, or 20.6% of the U.S. pharmaceutical company. When Sanofi first purchased shares of the Tarrytown, New York-based company in 2003, the stock traded below $20, compared with a closing price of $569.91 last Friday.

Sanofi rose as much as 2.2% to 89.57 euros in early Paris trading on Tuesday. Besides cancer, targets for deals may include immunology and gene-therapy technology, according to analysts at Bank of America Corp.

Bank of America and Goldman Sachs Group Inc. are the underwriters of the stake sale. Regeneron said it will fund the share repurchase with $3.5 billion of cash and $1.5 billion of financing from Goldman Sachs Bank USA.

Sanofi and Regeneron said there will be no change to their ongoing partnerships. Through their longstanding collaboration since 2003, the companies have brought five medicines to market, and have additional drug candidates currently in clinical development. Sanofi will continue to own about 400,000 Regeneron shares.

‘Increased Flexibility’

In December, Sanofi and Regeneron announced their intent to restructure collaborations for two drugs, the cholesterol-buster Praluent and the arthritis medicine Kevzara.

Hudson also said at the time that Sanofi could raise funds by selling its stake in Regeneron after a lock-up period expires at the end of 2020. “As the lockup expires, your flexibility increases,” he said. “We will look at the equity and decide where it can yield the best return for us as an organization.”

Regeneron announced later that month that it planned to cut staff as it restructured its partnership with the French drugmaker.

The deal will also likely reignite speculation that Sanofi may buy back L’Oreal SA’s 9.4% stake in the drug company. That, in turn, raises the possibility that L’Oreal would buy back a 23% stake that Nestle SA holds in the French cosmetics maker.

Covid-19 Collaboration

Both Sanofi and Regeneron have positioned themselves as front-runners in the race to develop therapies and vaccines to battle the coronavirus pandemic. Sanofi has received funding from the U.S. government to expedite research and development and scale up production capabilities for its high-profile vaccine candidates.

Sanofi is also working with Regeneron to evaluate how Kevzara could help very sick Covid-19 patients in respiratory distress. Initial trial results have suggested that the drug may help only the most critically ill patients⁠ — the severest of the severe⁠ — while those with slightly less dire cases of the disease likely won’t see a benefit.

The companies are moving forward with a big trial focused on the most serious Covid-19 cases, with results expected in June.