Digene Corp. has been sold to the Dutch maker of genetic testing equipment - Qiagen NV. Qiagen NV, a global player in molecular diagnostics technology has decided to acquire Digene, to expand into testing for cervical cancer and STDs (sexually transmitted diseases.)
The deal consists of cash and stock and is worth $1.6 billion. It values Digene at $61.25 per share. The price represents a 37 per cent premium over the closing share price of Digene on Friday. Under the terms of the deal - which were announced in a joint statement by the two companies on Friday - the acquisition is expected to be completed by September.
The transaction shall be effected as an exchange offer, followed by a merger of Digene into the U.S. subsidiary of Qiagen. The Digene shareholders may elect for $61.25 or 3.545 shares of Qiagen stock, subject to a condition that the total consideration paid comprises of 55% cash and 45% stock. Thereafter, Qiagen shareholders will own approximately 78 per cent of the combined company while Digene shareholders will hold the remaining 22 per cent.
The company’s United States headquarters will be in Maryland. Peter Schatz, Qiagen’s chief executive, will be the new company’s chief executive officer, while Daryl J. Faulkner, chief executive officer and president of Digene, will co-head the Integration Steering Committee.
Schatz told Reuters in an interview:
The strategic rationale for this transaction is compelling as it combines Qiagen’s leading technology portfolio and our breadth of molecular diagnostic tests with Digene’s leadership in what is seen as the fastest-growing segment of molecular diagnostics.
Qiagen expects the acquisition to enhance the earnings by 2-4 cents in 2008. The buyout will see Digene contribute revenue of $58 million to $60 million in the fourth quarter this fiscal and $260 million to $270 million over the entire next fiscal.
This strategic transaction will create a global leader in molecular diagnostics outside blood screening and viral load monitoring. It is anticipated that the combined company will have over US$350 million of molecular diagnostics revenues and more than US$800 million in revenues overall in 2008.
Although the geographical distance between the two companies’ headquarters may give the impression that this merger is a bit out of sync. The fact of the matter is that they have a long history of collaboration. Together, they have worked in various areas of research for more than a decade now.
