Betting on Molecular Diagnostics, QIAGEN Buys Digene
As a result of the acquisition, molecular diagnostic (MDx) applications will account for an estimated 48% of QIAGEN’s sales, compared to a current 27% share. QIAGEN currently offers 120 MDx assays for clinical laboratories. The deal is the realization of QIAGEN’s strategy to significantly increase its presence in the MDx market. The acquisition provides QIAGEN with a combined total of more than 300 MDx salespeople, entry into the fast growing oncology segment and sales in physician offices. QIAGEN and Digene have worked together for more than a decade. Digene’s decision to be acquired may have been precipitated by an expected increase in competition in the HPV testing market as Roche, Gen-Probe and Third Wave Technologies introduce tests.
Venlo, The Netherlands and Gaithersburg, MD 6/3/07—QIAGEN NV has agreed to acquire publicly listed molecular diagnostics firm Digene for approximately $1.6 billion, including $170 million in cash. QIAGEN will offer Digene stockholders $61.25 in cash per share, a 37% premium over Digene’s June 1 closing price, or 3.545 of QIAGEN stock. QIAGEN and Digene shareholders would hold 78% and 22% stakes in the combined company, respectively. The combined company is forecasted to have 2008 revenues of more than $800 million, including molecular diagnostic revenue of $350 million. Digene holds a leading position in HPV (human papillomavirus) targeted molecular diagnostic testing, according to QIAGEN. “This transaction creates significant value for our shareholders and instantaneous market and technology leadership in what is one of the most exciting areas of life sciences and healthcare: molecular diagnostics,” commented QIAGEN CEO Peer M. Schatz. “The joint franchises link virology with oncology, thereby creating an exceptional platform to add next-generation and high-value molecular diagnostic products and strategically position the company for future growth.” QIAGEN expects the acquisition to contribute $58–$60 million in fourth quarter revenues and $260–$270 million in 2008 revenues. The acquisition is expected to be dilutive to QIAGEN’s adjusted earnings per share (EPS) in the fourth quarter by $0.03–$0.04 and to be accretive to 2008 EPS by $0.02–$0.04. QIAGEN forecasts pretax cost savings of $35–$45 million annually and a “significant” increase in its operating margin starting next year. The transaction is expected to close in August or September.