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UPDATE: Merck Acquires Rosetta for $620 Million in Stock

NEW YORK, May 11 - Merck's $620 million acquisition of Rosetta will bring all of Rosetta's research and development efforts under the control of Merck's management, but won't affect Rosetta's Resolver business, a Rosetta spokeswoman told GenomeWeb.

The stock-for-stock transaction, which places an 82 percent premium on Rosetta's Thursday closing price, allows Rosetta to remain an single entity within Merck Research Laboratories, and for the Resolver, a system for analyzing gene expression, to be "run as a separate profit center," said Mary Drummond, a spokeswoman for Rosetta.

Currently Rosetta has licensed the Resolver technology to a number of pharmaceutical and biotechnology companies, including GlaxoSmithKline, Biogen, Immunex, Paradigm Genetics, and Merck.

However, Michael Clulow, an analyst with UBS Warburg in New York, questioned Merck's commitment to selling high-tech life sciences technology to its pharmaceutical rivals. 

"Merck is not going to support the greatest high-technology just to sell it to its rivals," Clulow said.

A spokeswoman for Merck, however, disagreed, saying that "Merck has always had a strong commitment to sharing technologies--we publish papers. We're committed to providing access to basic research and tools."

Drummond, at Rosetta, agreed that the direction of the company's other research and development efforts, including in DNA microarray and bioinformatics technology, will be subject to Merck's needs.

"The other technologies are a part of Merck's technologies," she said. "They'll be focused on whatever Merck's drug discovery goals are."

As a result, Rosetta will review its current research collaborations with Abbott Laboratories, Monsanto, Gemini Genomics, and Sangamo Biosciences to determine whether they jibe with Merck's goals. "We'll be essentially fulfilling our requirements, but each one is a unique circumstance," Drummond said.

The two companies first entered into a relationship six months ago, when Merck began licensing the Resolver from Rosetta. Several weeks ago, Drummond said, the companies began discussing a potential collaboration, and "it seemed the best idea [was for Merck to acquire Rosetta]."

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