A Diagnostics & Imaging Week
Diagnostics giant Roche (Basel, Switzerland) reported that it has sweetened its offering price for all outstanding publicly-held shares of Genentech (South San Francisco, California) from $86.50 up to $93 per share and extended the offer to midnight, EST, on March 20. All other terms and conditions of the tender offer remain unchanged. The latest bid adds up to about $45 billion to the hostile bid price.
"Based on conversations with Genentech shareholders, we believe that there is a strong sentiment to bring this process to a conclusion. As a result, we are increasing our price to $93 per share to maximize shareholder participation and will proceed quickly to complete all necessary financing. We now look forward to successfully completing the transaction," said Franz Humer, chairman of the Roche Group.
As of the close of business on March 5, about 500,000 shares had been tendered pursuant to the offer In its statement Friday, Roche said it received tenders for only 500,000 shares in the tender offer that was set to expire March 12, a tiny fraction of the 44% the company needs to take control of Genentech.
As of Feb. 6, Genentech had just over 1.05 billion shares of common stock outstanding, of which Roche owned about 587.2 million.
Funding on Roche's side, though, may still remain an issue. In an SEC filing earlier Friday, the company said it had raised about $36 billion through a series of debt offerings, and it calculated the $86.50-per-share bid to cost about $42.1 billion. It said the rest of that funding could be raised through a combination of debt financing, commercial paper, or existing credit facilities, among other methods.
Greenhill & Co. is acting as financial advisor to Roche and Davis Polk & Wardwell is acting as legal counsel in connection with the tender offer.
In a statement, a special committee of the board of directors of Genentech urged its shareholders to take no action at this time with respect to Roche's revised tender offer to acquire all of the outstanding shares of Genentech stock not owned by Roche at a price of $93 in cash per share.
The committee said it intends to take a formal position regarding the revised Roche offer promptly, and will explain in detail its reasons for that position by filing a statement with the SEC.
Last month, the special committee of the board of directors of Genentech urged the company's shareholders to take no action at that time with respect to the hostile tender offer commenced by Roche to acquire all of the company's outstanding shares not owned by Roche at a price of $86.50 in cash per share, which was $2.50 less per share than what Roche originally offered to buy the company for last July.
Currently, Roche owns about 55.8% of the outstanding shares of Genentech.
The Genentech special committee is represented by Goldman, Sachs & Co. and Latham & Watkins. Genentech is represented by Wilson Sonsini Goodrich & Rosati.
In other dealmaking news:
• Digirad (Poway, California), a provider of diagnostic imaging products and personnel and equipment leasing services, said it has sold the assets related to its Arizona and Nevada service hub locations to Ohio-based Antigua Medical Services.
The purchase agreement calls for the sale of portable nuclear imaging cameras, vans and related equipment, and the assignment of certain customer contracts of the former Digirad service hub locations in Las Vegas, Phoenix and Tucson.
"Our strategy is to focus on a core group of DIS (Digirad Imaging Solutions) locations in order to facilitate improved utilization and profitability and this agreement is another important step in that direction," said Digirad CEO Todd Clyde. "With this sale, our goal of hub realignment and consolidation is well on its way to completion and we expect to conclude the program in the coming months."
Clyde said Antigua was a "natural choice" as a buyer because of its "commitment to customer service with an employee-oriented culture."
"We are excited about the opportunity in front of us and believe we can build on the success and quality-of-service reputation Digirad has created at these Arizona and Nevada locations," said Daniel Rice, a managing member of Antigua. "We plan to continue providing excellent service for the customers that will be served by Antigua Medical Services."
Digirad provides diagnostic imaging systems and personnel and equipment leasing services to physicians' offices, hospitals and imaging centers for cardiac, vascular, and general imaging applications.
• Nanogen (San Diego), developer of molecular and rapid diagnostic products, said it has signed an end-user license agreement (EULA) with Quest Diagnostics (Madison, New Jersey) for use of the company's MGB Probe technology in human in vitro diagnostic testing. According to the agreement, Quest will have rights to use and sell products and services incorporating the MGB Probe technology. Terms of the EULA include an upfront fee and royalties paid on tests sold using the licensed technology.
"We're proud that Quest Diagnostics, the world's leader in diagnostic testing, is using our proprietary minor groove binder (MGB) technology and incorporating it into some of their laboratory developed molecular tests," said Merl Hoekstra, Nanogen's VP of corporate and business development. "We're proud of the growing reputation and the expanding base of licensed end users of our technology."
Nanogen's MGB Probe technology is broadly licensed in the research and clinical fields and accounts for a majority of the company's revenue.
Nanogen's products include molecular diagnostic kits and reagents, and kits for rapid point-of-care testing.
• Lifespan (Las Vegas, Nevada) said it is negotiating to acquire all right, title, and interest to a collection of software and hardware products and technologies known as the MyScreenMD.com home based medical evaluation program. This program will integrate seamlessly with the company's Electronic Medical Evaluation model, Lifespan noted.
The company will be acquiring, through its medical technology subsidiary Advanced Medical Devices (Waterloo, Iowa), all the assets of MyScreenMD.com including proprietary hardware and software, industrial designs, intellectual property and websites and URLs of the company including MyScreenMD.com.
The MyScreenMD program is focused upon becoming the leading provider of Internet based home medical diagnostic and testing products utilizing a Screen based Internet access device in partnership with the medical community. According to the company, the primary benefits of the MyScreenMD.com model are clinical, resulting in superior patient outcomes, psychosocial, resulting in better patient satisfaction, and economic, resulting in significantly lower costs.
Lifespan intends to offer its services and products in conjunction with participating managed care providers and physicians, who will receive significant benefits from their participation. Now, medical practitioners can easily monitor and evaluate their patients by transmitting and receiving secure diagnostic clinical data via the MyScreenMD.com medical testing and evaluation portal. Physicians will also receive notification of their patient's results via e-mail and may download the stored data at their convenience from the MyScreenMD.com portal.
Albert Cook, MD, CEO of MyScreenMD.com, is a member of Lifespan's board of medical advisors.