A Medical Device Daily

Roche (Basel, Switzerland) and Arius Research (Toronto) reported signing a definitive agreement for Roche to acquire Arius in an all-cash transaction of nearly $191 million.

Arius is the developer of a proprietary antibody platform called FunctionFirst which rapidly identifies and selects antibodies based on their functional ability to affect disease before progressing into clinical development. The FunctionFirst platform will allow Roche to further strengthen its developmental portfolio, initially within the areas of oncology and inflammatory diseases where this new technique offers potentially broad therapeutic applications.

"Arius' promising platform and early pipeline of new antibody candidates represent an excellent fit with our own progressing research in the fields of cancer and immunology," said Lee Babiss, head of global research at Roche. "The FunctionFirst approach provides us with a large library of antibodies from which we can identify the best new drug candidates for the development of clinically differentiated medicines."

Roche will pay C$2.44 for each common share of Arius Research. This price represents a 15% premium to the closing price on July 22, 2008 and a 44% premium to the 20-day volume-weighted average closing price. Roche will also acquire all of the issued and outstanding warrants of Arius. Roche will pay C$1.44 for each Class F warrant and C$1.78 for each Class G warrant.

The acquisition of Arius will be completed by way of a statutory plan of arrangement under Canadian law. In addition to the approval of Arius' shareholders and warrant holders, the transaction will require court approval.

As part of the transaction, shareholders, warrant holders and management representing 54.3% of outstanding shares and 72.3% of outstanding warrants have entered into an agreement to support the transaction at the shareholder meeting. The acquisition, which is subject to customary closing conditions including regulatory approvals, is expected to close in 3Q08.

Roche said that the Arius site will remain open and serve as a centre for the discovery of innovative biotherapeutics, initially focusing on the areas of oncology and inflammation.

Aquilo Partners, Reedland Capital Partners and Dundee Securities acted as financial advisors to Arius in connection with this transaction.

Arius is focused on discovering and developing the next wave of antibody therapeutics to treat cancer and other diseases.

Roche made ripples earlier this week when it offered Genentech (South San Francisco, California) a proposal to acquire all of the outstanding shares of Genetech's stock, not already owned by Roche, at a price of $89 in cash a share (Medical Device Daily, July 23, 2008). Roche is a research-focused healthcare group that develops products in the fields of pharmaceuticals and diagnostics.

Cross Country Healthcare (CCH; Boca Raton, Florida) reported that it has entered into an agreement to acquire substantially all of the assets of privately held MDA Holdings (MDA; Norcross, Georgia) and its subsidiaries for $112.3 million in cash, plus additional earn-out payments based on 2008 and 2009 performance criteria.

The transaction is subject to certain approvals and closing conditions. CCH said it anticipates closing the transaction by the end of 3Q08. The company expects this acquisition to be accretive to its 2008 earnings by roughly 2 cents a diluted share, subject to the timing of the closing of the transaction.

Cross Country Healthcare entered into a fully underwritten $200 million financing commitment with Wachovia Capital Markets and certain of its affiliates, and Banc of America Securities. Pursuant to this commitment, the company will amend and keep in place its existing $75 million revolving credit facility and also enter into a $125 million five-year term loan, with the proceeds used to finance the acquisition and for general corporate purposes.

MDA provides multi-specialty physician and allied staffing services to the healthcare industry in all 50 states.

Cross Country is a provider of nurse and allied staffing services in the U.S., a provider of clinical trials services to global pharmaceutical and biotechnology customers, as well as a provider of other human capital management services focused on healthcare.

In other dealmaking activity:

• HLTH (Elmwood Park) reported that it has completed the sale of its ViPS segment to General Dynamics Information Technology, a business unit of General Dynamics (both Providence, Rhode Island), for $225 million in cash. The transaction was announced on June 3.

HLTH owns 84% of WebMD Health (New York). WebMD is a provider of health information services, serving consumers, physicians, healthcare professionals, employers and health plans through its public and private online portals and health-focused publications.

• Air Products (Lehigh Valley, Pennsylvania) reported that it is planning to sell its U.S. Healthcare business and will record an impairment charge of roughly $315 million ($237 million after-tax) in its 3Q08 results, ended June 30.

The company plans to report the U.S. Healthcare business as a discontinued operation beginning in the fiscal fourth quarter and will continue to operate and serve patients until the business is transitioned to a new owner.

In 2007, the company implemented a number of actions to improve the performance of its U.S. Healthcare business, including changes in management, a product and service offering simplification program, and other measures to drive earnings growth and improve profitability, but the business has continued to underperform this year.

As a result, Air Products disclosed in April that it was evaluating its strategic options for the business. Based on a review of the market and competitive conditions, the company determined that the U.S. Healthcare business no longer fits its business portfolio. At its July meeting, the company's board of directors authorized management to pursue the sale of the business, and the company is in discussions with potential buyers.

Air Products also reported that it has reached preliminary agreement to sell its U.S. Healthcare businesses in the metropolitan New York area and in New Jersey, including its A&J Care locations in Glendale and Peekskill, New York, and its COPD Services locations in Runnemede, Cape May Courthouse and Cedar Grove, New Jersey. This sale is expected to be completed by the end of the fiscal year.

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