NEW YORK (GenomeWeb) – Roche will acquire the remainder of Foundation Medicine for $2.4 billion in cash, the companies said today.
Roche already owned about 57 percent of Foundation's outstanding common stock, following a tender offer in 2015.
Under a definitive merger agreement, Roche will acquire all outstanding shares of Foundation Medicine that Roche or its affiliates don't already own at a price of $137 per share in cash, a 29 percent premium over Foundation's closing price on Monday and a premium of 47 percent and 68 percent over its 30-day and 90-day volume weighted average share price, respectively, on June 18.
The transaction is valued at $2.4 billion, and the total company is valued at $5.3 billion on a fully diluted basis.
The merger agreement was approved unanimously by Roche's board, a special committee of independent directors of Foundation Medicine, and Foundation's full board with Roche members abstaining.
Daniel O'Day, CEO of Roche Pharmaceuticals, said in a statement that the deal is important for Roche's personalized healthcare strategy since molecular analysis and genomic profiling are "key enablers for the development of, and access to, new cancer treatments."
"We will preserve [Foundation Medicine's] autonomy while supporting them in accelerating their progress," he said.
"Joining forces with Roche as an independent operating company allows Foundation Medicine to continue its collaboration with Roche, as well as our biopharma partners, to drive ubiquitous access to [comprehensive genomic profiling] testing and innovative data services," Foundation CEO Troy Cox said in a statement.
Under the terms of the agreement, Roche will promptly initiate a tender offer to acquire all outstanding shares of Foundation's common stock. Following the completion of the tender offer, Roche will acquire all remaining shares at the same price through a second step merger. The transaction is expected to close in the second half of 2018.
Citi is Roche's financial advisor and Davis Polk & Wardwell is its legal counsel. Foundation's special committee has appointed Goldman Sachs as its financial advisor and Goodwin Procter as its legal counsel.
The transaction is Roche's second major deal in the personalized healthcare space this year. In April, the company completed the acquisition of Flatiron Health, a provider of oncology-focused electronic health record software, for $1.9 million. Flatiron and Foundation Medicine struck a partnership in 2014 to create an integrated data platform to develop oncology treatments, and presented results from their collaboration at a conference last year.
Last month, Foundation Medicine reported a doubling of its Q1 revenues, to $52.8 million. This included $18.8 million from clinical testing, $27.8 million from pharma companies for molecular information services, and $6.2 million from pharma R&D services. The firm said it expects 2018 revenues between $200 million and $220 million, and to deliver between 90,000 and 100,000 clinical tests this year.
Foundation Medicine's shares increased about 28.5 percent, to $136.75, in mid-morning trading on the Nasdaq.