IG Laboratories Inc. and Genzyme Corp. announced Thursdaythat they have signed an agreement under which IG Labs willacquire Genetic Design Inc., a privately held genetic testingcompany.
About $28.6 million in Genzyme stock and cash will be used forthe purchase by IG Labs, which is majority held by Genzyme.
Genzyme also is making an additional $5 million equityinvestment in IG Labs, bringing Genzyme's ownership stake to68 percent from 56 percent.
GDI of Greensboro, N.C., currently serves such genetic testingmarkets as paternity testing and bone marrow typing. Thecombined business is expected to generate 1992 revenues ofabout $30 million.
"IG Labs' focus has been prenatal genetic testing," said DavidMcLachlan, chief financial officer of Genzyme. "But there's abigger market developing in high-volume testing, such as cysticfibrosis screening and, ultimately, screening based on fetal cellseparation from maternal blood. GDI is very good at higher-volume genetic tests."
GDI shareholders will receive about 390,000 shares of Genzymecommon stock (NASDAQ:GENZ), valued at about $22.6 million,and $750,000 in cash. In addition, options for IG Labs stock(NASDAQ:IGLI) will be substituted for outstanding GDIemployee stock options.
IG Labs also will derive about $6 million from sales of its stockto Genzyme that will principally be used for working capitaland to pay off GDI's bank debt.
IG Labs will issue to Genzyme about 2 million shares ofcommon stock in exchange for the Genzyme shares and cash tobe issued in the acquisition.
The unrelated $5 million equity investment is to be used forworking capital by Framingham, Mass.-based IG Labs. Uponcompletion of the deal, Genzyme will hold about 2.4 millionadditional IG Labs shares.
The acquisition is subject to approval of GDI shareholders andis expected to be completed by the end of the first quarter.Marquette Venture Partners of Deerfield, Ill., is the principalGDI shareholder.
Genzyme shares lost $3.75 to $54.25, and IG Labs stock, one ofthe few gainers on Thursday, rose $1.25 to $15.50. -- KarenBernstein
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