UPDATE 1-Pfizer to buy Coley Pharmaceutical for $164 mln

(Adds details, share price)

BOSTON, Nov. 16 (Reuters) - Pfizer Inc (PFE.N), the world's biggest drugmaker, said on Friday it has agreed to acquire Coley Pharmaceutical Group Inc COLY.O, a developer of vaccine technology and drugs to treat cancer, asthma and other disorders, for $164 million.

Pfizer will make a cash tender offer for all the outstanding common stock of Coley for $8.00 a share, a 167 percent premium over Coley's closing price of $3.00 a share on Thursday on Nasdaq.

Coley's shares rose as high as $7.80 in early trading.

The companies said shareholders holding about 27 percent of Coley's shares have entered into agreements to tender their shares.

Pfizer said the acquisition is designed to extend its presence in the fast-growing market for vaccines and to boost its portfolio of experimental drugs to treat a range of diseases, including Alzheimer's, asthma, infectious diseases and cancer.

Coley is working to develop a new class of drug candidates called TLR Therapeutics which either stimulate or block immune system receptors known as Toll-like receptors (TLR), which direct the immune system to fight disease.

The acquisition is expected to close in 2008. (Reporting by Toni Clarke, editing by Gerald E. McCormick and Dave Zimmerman)