Netherlands' Qiagen buying Digene for $1.6 billion
NEW YORK (Reuters) - Qiagen NV (QGEN.DE) (QGEN.O), a maker of genetic testing equipment, said on Sunday it will acquire Digene Corp. DIGE.O for $1.6 billion in cash and stock, to expand into testing for cervical cancer and sexually transmitted diseases.
The deal values Digene shares at $61.25, a 37 percent premium to its closing price on the Nasdaq on Friday, the companies said in a joint statement.
Netherlands-based Qiagen's acquisition comes as major drug makers pursue vaccines for cervical cancer, which is the second most common cancer in women under 40.
Maryland-based Digene says its flagship product is a test for the detection of human papillomavirus (HPV), the cause of essentially all cervical cancers.
"(We) are on a major mission here to help fight, or maybe even eradicate a disease that kills a woman every two minutes," Qiagen CEO Peer Schatz told Reuters in an interview. "The ability to test and amount of testing still has a huge runway to grow."
The two companies have worked together for more than a decade.
From early 2005 to early this year, Digene shares more than doubled in value. Its stock, however, dropped nearly $10 per share from February through March. Digene closed at $44.77 on Friday.
"When you add the resources and the capabilities of the merged company, there is so much more potential," Digene CEO Daryl Faulkner told Reuters in a joint interview with Schatz.
Faulkner said the deal allows Digene to grow both domestically and abroad faster. He said his role at the company beyond steering the integration was unclear. Schatz will remain CEO. A break-up fee will be disclosed later in a regulatory filing.
Qiagen expects the acquisition to contribute revenue of $58 million to $60 million in the fourth quarter and $260 million to $270 million for the full year 2008.
On an adjusted basis excluding one-time charges, integration and restructuring costs and other items, the acquisition is expected to dilute Qiagen's adjusted earnings by 3 cents to 4 cents per share in the fourth quarter. It is anticipated that the transaction, slated to close in August or September, will boost Qiagen's adjusted earnings in 2008 by 2 cents to 4 cents per share.
The deal will consist of cash and Qiagen stock, and Digene shareholders may elect to receive for each Digene share either $61.25 in cash or 3.545 shares of Qiagen stock so that the total consideration issued for Digene stock consists of 55 percent cash and 45 percent Qiagen stock.
Qiagen shareholders will own approximately 78 percent of the combined company and Digene shareholders will own approximately 22 percent.
Qiagen is the world's leading provider of sample and assay technologies for biological targets such as DNA, RNA and proteins. The Venlo, Netherlands-based company focuses on areas such as pre-analytical sample preparation and assay solutions in research for life sciences, applied testing and molecular diagnostics.
The U.S. Centers for Disease Control and Prevention estimates that 6.2 million Americans acquire a new genital HPV infection every year and that 80 percent of women will be infected by the age of 50, the companies said.
The U.S. Food and Drug Administration last year cleared Merck & Co. Inc's (MRK.N) cervical cancer vaccine Gardasil.
GlaxoSmithKline Plc (GSK.L) said in March it applied for U.S. approval of its Cervarix vaccine.
Cervical cancer kills about 300,000 women worldwide each year, most of them in the developing world.
In the United States, widespread screening often catches the disease early when it is treatable, but about 4,000 women still die from it each year.