NEW YORK (GenomeWeb News) – Gen-Probe said after the close of the market Tuesday that it has signed a definitive agreement to acquire Prodesse for at least $60 million in cash.
Gen-Probe said that the acquisition price for the privately held molecular diagnostics firm could rise to up to $85 million if certain financial and regulatory milestones are met in 2010 and 2011.
Milwaukee, Wis.-based Prodesse sells three molecular tests that have been cleared for marketing by the US Food and Drug Administration. The firm's ProFlu+ assay was cleared by FDA in January 2008 for detection and discrimination of influenza A, influenza B, and respiratory syncytial virus. It also sells a real-time molecular assay, which also has been cleared by FDA, for diagnosis of Clostridium difficile.
"We believe acquiring Prodesse supports our strategic focus on commercializing differentiated molecular tests for infectious diseases," Carl Hull, Gen-Probe's president and CEO, said in a statement.
As part of the deal, Gen-Probe's sales force in the US, Canada, and Europe will begin co-promoting Prodesse's products in mid-October.
Gen-Probe said that it expects to pay for Prodesse with its cash on hand, which as of June 30, stood at nearly $570 million. It expects Prodesse to add around $15 million in revenues in 2010, and boost the firm's earnings per share by around $.05 next year.
The boards of directors of both firms have unanimously approved the deal. The firms expect the transaction to close within a month, subject to customary conditions.
The acquisition is Gen-Probe's second this year aimed at expanding its presence in the molecular diagnostics space. Early in 2009, it acquired Tepnel Life Sciences for £92.8 million ($132.2 million).
Peter Lawson, an analyst with Thomas Weisel Partners, said in a research note today that the acquisition of Prodesse "signals a distinct change in management - the company more willing to utilize its balance sheet ... to diversify the revenue base and reacclerate growth, coming at a time when we expect further consolidation of the industry."
In late Wednesday morning trade on the Nasdaq, shares of Gen-Probe were up around 3 percent at $44.13.