Hologic plans to acquire Third Wave Technologies for about $580 million. Such a take over is expected to broaden the firm’s diagnostic division and strengthen its focus on women’s health. Specifically, it will allow Hologic to tap into the HPV diagnostic segment.
Hologic made a $11.25 per share cash tender offer, valuing Third Wave at 7.14% over its last closing price. Third Wave opened trading today at $11.13. Hologic intends to borrow $600 million in the form of a senior secured credit facility to finance this transaction.
Third Wave develops and markets molecular diagnostic reagents for DNA and RNA analysis based on its Invader® chemistry. The company's portfolio consists of products related to cystic fibrosis, hepatitis C, cardiovascular risk, and other diseases. The company recently submitted to the FDA PMA applications for two HPV tests.
The HPV area represents a $200 million market and has grown at over 40% in each of the past five years, according to Hologic. The company also believes the global market for HPV testing will increase to $800 million in the next few years.
“Hologic has an established sales and distribution network for women's health as well as extensive relationships with clinical labs and OB/GYN channels,” according to Jack Cumming, chairman and CEO of Hologic. “If and when Third Wave's HPV tests receive FDA approval, which we hope will be in the first half of calendar 2009, we will be well-positioned to take these products quickly and effectively to market.”
Additionally, Third Wave’s Invader chemistry provides a platform for future development of molecular diagnostics within the women's health segment.
The transaction is expected to close in the third calendar quarter. Hologic reports that it will be dilutive to Hologic's adjusted earnings per share in the first full year after closing and accretive thereafter.
Hologic anticipates $0.02-0.03 per share dilution to the firm’s previous guidance in fiscal 2008. The acquisition is expected to be approximately $0.10 dilutive to non-GAAP EPS in fiscal 2009 and to be accretive to non-GAAP EPS beginning in fiscal 2010.