Hologic ($HOLX) will become a major player in molecular diagnostics focused on sexually transmitted diseases and boost its women's health expertise with the company's planned $3.7 billion cash acquisition of Gen-Probe ($GPRO) announced early Monday. That amounts to $82.75 per share, which, as Bloomberg explains, is about 20% above Gen-Probe's April 27 closing price of $68.71. Pending shareholder and various regulatory approvals, the deal will close in the second half of the year.
Molecular diagnostics are becoming increasingly desirable to both device and drug companies. And specializing in the rapidly developing field can help companies stand out from the pack. With that in mind, Hologic gains access to Gen-Probe's APTIMA tests for chlamydia/gonorrhea, the human papillomavirus, and the parasitic STD known as trichomoniasis. But Hologic also expands its offerings thanks to other Gen-Probe tests focused on women's health, as well as instruments, blood screening and prostate oncology services. Bedford, MA-based Hologic says all of those business lines complement its existing diagnostic products (including its own HPV test), medical imaging systems and surgical tools focused on women's health, but that highest on the list are sexually transmitted diseases.
"This transaction establishes Hologic as a premier company in STD diagnostics and advances our core focus on women's health," explains Rob Cascella, Hologic president and CEO, in a statement. "Our combined company will be well-positioned globally to capitalize on the fast-growing molecular diagnostics market with an established global infrastructure."
So what does Gen-Probe gain from this (other than a big price boost for its shareholders)? The San Diego company and its 1,400 employees will get more robust access to the global market. Hologic says it will sell Gen-Probe products in more than 150 countries and use its European direct sales and marketing structure, plus its investment in distribution for China (including 500-plus employees) to expand its reach, and also pursue cross-selling opportunities. Hologic says the combination will save $75 million within three years of the deal close, with $40 million of that in the first year. Where the savings will come from is potentially ominous, as the companies mention "the alignment of assets to maximize efficiencies and overhead consolidation."
Cascella will serve as president and CEO of the combined company. Meanwhile Gen-Probe Chairman and CEO Carl Hull plans to stay on to run the combined diagnostics business. Hologic plans to keep its headquarters in Bedford, but said the combined enterprise "will maintain a significant presence" in San Diego, with Gen-Probe set to become a wholly owned subsidiary.
- here's the deal announcement
- read Bloomberg's take
ALSO: Hologic has reported second-quarter 2012 earnings, seeing revenues of $471.2 million, an increase of 7.4% versus $438.7 million a year earlier. Release
AND: Gen-Probe reported first-quarter 2012 earnings, seeing strength in its women's health franchise. Release