This story has been updated from a previous version.
NEW YORK, May 29 - Sequenom has agreed to acquire Gemini Genomics in a stock-for-stock deal valued at $238 million, the companies said Tuesday.
The merger will leverage Sequenom's capabilities in large-scale genetic analysis with Gemini's databases of clinical and phenotypical information, the companies said.
Under the terms of the deal, Gemini shareholders will receive one share of Sequenom stock for every five shares of Gemini ordinary stock, and one share of Sequenom stock for every 2.5 Gemini American Depository Shares. The deal represents a premium of 26 percent over Gemini's Friday closing price of $5.60 on the Nasdaq.
All told, San Diego-based Sequenom will issue 12.9 million new shares, valued at $228.1 million based on Sequenom's closing price of $17.68 on Friday. The company will also issue an additional 1.5 million options, valued at $10 million.
The combined company will have its headquarters in San Diego. Gemini, based in Cambridge, UK, will merge its operations into the newly formed Sequenom Biotherapeutics division, which will be responsible for bringing candidate gene drug targets into preclinical development.
Together, the companies plan to identify 400 disease-associated genes by mid-2002, and develop those targets into potential diagnostics and therapeutics both internally and with the help of partners, said Toni Schuh, CEO of Sequenom.
"We will continue to aggressively pursue a partnering approach to deal with the 400 candidate genes," he said in a conference call.
In April of 1999, the companies began collaborating to discover gene targets related to high cholesterol levels. Six months later, they identified two novel candidates. Once the two companies had achieved this success, they began discussing how else the companies might work together, and ultimately agreed an acquisition was most suitable, said Schuh. "Both companies realized they have an incredible value proposition," he said.
Gemini also has collaborations with the Karolinska Institute and the Huddinge Hospital in Stockholm to determine the relationship between particular SNPs and drug metabolism. The company, in collaboration with Large Scale Biology, has isolated more than 70 proteins it believes are associated with the development of major chronic diseases.
As a part of Sequenom, "our current intention is to continue with all our collaborations," said Paul Kelly, CEO of Gemini. Kelly added that the Gemini's current partners might also find value in Sequenom's technology, but that Gemini's partners don't have access to all of the company's proprietary data.
The combined company will hold a disease gene patent portfolio of 11 issued patents with 89 pending and a technology patent portfolio of 59 issued or allowed patents with 96 pending.In the first quarter of 2001, Gemini had $1.6 million in revenue, compared with $200,000 in the comparable quarter a year ago. As of March 31, 2001, Gemini had total cash resources of $80.7 million. The combined company will have combined cash of $208 million, the companies said.