Swiss drug giant Roche Holding AG RHHBY announced a big-ticket acquisition that would boost its presence in the diagnostics market, setting the tempo for a merger Monday.
What Happened: Roche said it has entered into a definitive agreement to acquire GenMark Diagnostics GNMK for $24.05 per share in cash, or about $1.8 billion, on a fully diluted basis.
The per-share value of the deal represents a 30% premium from the $18.50 per share at which GenMark's shares closed Friday, and a 43% premium over the stock's closing price on Feb .10, when a media report broke out regarding a possible transaction.
The boards of both companies have approved the transaction. GenMark's board will recommend that its shareholder tender their shares in response to Roche's offer, the companies said.
Roche and GenMark expect the deal to close in the second quarter of 2021, with the closure subject to customary conditions, including tendering of a majority of the outstanding shares and the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
Following the consummation of the transaction, GenMark will continue to operate out of its current location in Carlsbad, California.
Deal Logic: GenMark was one of the beneficiaries of the COVID-19 pandemic, as it began marketing the ePlex SARS-CoV-2 diagnostic test.
The company said in its fourth-quarter earnings release in late February its ePlex revenues climbed 155% year-over-year to $152.6 million in 2020, accounting for about 89% of the total revenues.
It is a win-win proposition for both, as Roche's global network will give expanded reach for GenMark's products, while the latter's syndromic panel testing portfolio will complement the former's current molecular diagnostics portfolio.
GenMark's Respiratory Pathogen Panels identify the most common viral and bacterial organisms associated with upper respiratory infections, including SARS-CoV-2, complementing Roche's extensive portfolio of COVID-19 diagnostics solutions.
"Acquiring GenMark Diagnostics will broaden our molecular diagnostics portfolio to include solutions that can provide lifesaving information quickly to patients and their healthcare providers in the fight against infectious diseases," said Thomas Schinecker, CEO of Roche Diagnostics.
The Price Action: GenMark closed Friday's session up 0.19% to $18.50, having about 27% in the year-to-date period.
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