Extending its reach into cancer genetic testing, IG LaboratoriesInc. and its majority owner, Genzyme Corp., agreed to acquireVivigen Inc., in exchange for stock valued at $40 million.

"The addition of Vivigen's capabilities in prenatal genetictesting and cancer genetics is another major step in ourstrategy of becoming the leader in the rapidly expandinggenetic testing market," said Elliott D. Hillback Jr., president andchief executive officer of Framingham, Mass.-based IGLaboratories.

It also helps that Vivigen of Santa Fe, N.M., is profitable,earning $1.2 million, or 47 cents a share, during 1991 on $11.4million in revenues. IG Laboratories, which has been on a two-year shopping spree of regional testing laboratories, has seenits bottom line brought down by the need to amortize thegoodwill carried on its books from those cash acquisitions.Excluding Vivigen's potential contribution, IG had expected torack up 1992 sales of about $40 million, up from just $12million last year, according to a spokesman.

Genzyme of Cambridge, Mass., said it signed a letter of intentby which it would exchange for each of Vivigen's 2.6 millionshares 0.3106 share of Genzyme stock. At Genzyme's(NASDAQ:GENZ) closing stock price on Monday of $53.75 ashare, up 25 cents for the day, each Vivigen share was worth$16.94 per share.

Vivigen (ASE:VIV) closed Monday at $15.50, up $1.50. It hastraded in a 52-week range of $12.13 to $20.50 a share. IGLaboratories (NASDAQ:IGLI), which is roughly 70 percentowned by Genzyme, closed at $11 a share, up $1.

The transaction will be adjusted should Genzyme shares tradeoutside a range of $42 to $57 a share. Genzyme plans to acquirethe testing laboratory, which would become a wholly ownedGenzyme subsidiary, to structure the acquisition as a tax-freeexchange that would benefit Vivigen shareholders. The deal isexpected to be completed by November.

A contrasting review of strategies at IG Laboratories andVivigen was published in the Feb. 17 edition of Forbes. IGLaboratories was described as a company spending $3.3 millionover two years to pioneer prenatal testing technology, such asgene probes, while Vivigen was happy to buy its test systemsoff the shelf but to dedicate itself to quality service.

Genzyme expects to retain all of Vivigen's 150 employees,except for Thomas K. Reed Jr., the former stockbroker turnedentrepreneur who started Vivigen 10 years ago with $100,000of his own funds. It's expected that Reed, who has startedbusinesses ranging from a radio station to a computer softwaremaker, might have another project in mind, said Donna LaVoie,Genzyme's manager of public relations.

-- Ray Potter Senior Editor

(c) 1997 American Health Consultants. All rights reserved.