UPDATE 3-Sweden's SOBI makes $1.7 bln offer to buy CTI BioPharma

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SOBI offers 89% premium for CTI BioPharma

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Deal to be partly funded by share issue

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SOBI shares slide 16%

(Adds share move in paragraph 4, analyst comment in paragraph 5, company comment in paragraph 8)

By Louise Rasmussen

COPENHAGEN, May 10 (Reuters) - Drug maker Swedish Orphan Biovitrum (SOBI) said on Wednesday it had agreed to make a $1.7 billion cash offer to buy CTI BioPharma, a U.S. biopharmaceutical company focused on blood related cancers and rare diseases.

SOBI, a rare disease drugmaker, said it would make a tender offer for $9.10 per CTI share, a premium of 89% over Tuesday's closing price of $4.82, to be partly funded via a share issue.

"The acquisition of CTI is the latest in a series of transformative transactions SOBI has conducted to build its leading rare haematology franchise," SOBI Chief Executive Guido Oelkers said in a statement.

Shares in SOBI fell 16% by 0709 GMT, with RBC saying the share issue may initially be perceived negatively.

"Assuming half of the $1.7 billion purchase price equates to a $850 million rights issue, this would equate to 11% of the current equity base," the broker said in a note.

CTI's VONJO, which treats rare haematological platelet disorders, will add a differentiated therapy to SOBI's existing portfolio, SOBI said.

The planned transaction, which was unanimously recommended by CTI's board, is fully funded through debt financing, up to half of which is expected to be refinanced through a rights issue, the Swedish drug maker added.

The company said it expects the acquisition to accelerate its revenue growth and improve its margins.

Investor AB, SOBI's top shareholder, supports the acquisition of CTI, and is subscribing to about 34.7% of the rights issue, SOBI said.

The transaction is expected to close in the third quarter of this year, the Swedish company added. (Reporting by Louise Breusch Rasmussen; Editing by Terje Solsvik, Muralikumar Anantharaman and Sonali Paul)