Gen-Probe jumps on takeover speculation

San Diego-based Gen-Probe has jumped 18 percent on talk that it will be sold, and it may still be worth $1.3 billion more in a takeover by Novartis or Life Technologies, Bloomberg is reporting today. The molecular diagnostics company has more than 60 percent of the STD-testing market and an 80 percent share of blood-bank screenings in the U.S., according to the news service. And it could fetch $5.3 billion, based on similar deals, the data show.

Last week, Bloomberg reported the test maker has hired Morgan Stanley to find a buyer, citing three people with knowledge of the matter. Initial bids for Gen-Probe are due in the next couple of weeks, said one of the sources, who declined to be identified because of the confidential nature of the process. The news came as the company reported financial results for Q1 2011. It had total revenues of $143 million for the quarter and non-GAAP earnings per share of $0.54, 13 percent higher than in the prior year period, according to a company statement.

"Gen-Probe posted solid financial results in the first quarter of 2011, including all-time highs in product sales and total revenues, based on the acquisition of GTI and good growth from our PRODESSE influenza and APTIMA women's health products," said Carl Hull, the company's president and CEO. "In addition, all our major pipeline initiatives remain on track, with an important new product cycle just beginning."

Analysts have been quick to praise the company. "Gen-Probe is best in class," said Peter Lawson, a Mizuho Securities analyst, according to Bloomberg. "What really makes Gen-Probe stand out is its profitability and margins, which are outstanding for the industry. It's not surprising at all if they were purchased."

As the San Diego Union Tribune points out, the medical diagnostics industry has been undergoing consolidation for some time. And Gen-Probe has been on the buying end of the spectrum over the years. Last December, for example, Gen-Probe acquired GTI Diagnostics, a privately held specialty diagnostics company focused on the transplantation, blood bank and specialty coagulation markets, for $53 million in cash.

- see Gen-Probe's Q1 results 
- check out the Bloomberg report
- and read more from Bloomberg
- see the Union Tribune story