Medical device maker Hologic Inc. has agreed to buy diagnostic test maker Gen-Probe Inc. for about $3.72 billion, expanding its portfolio in an area of medicine expected to see big growth.
Gen-Probe provides molecular diagnostics products and services, including several tests for sexually transmitted diseases.
Hologic said Monday that the all-cash deal will advance its core focus on women's health.
Hologic has agreed to pay $82.75 for each share of Gen-Probe, a 20 percent premium over Gen-Probe's closing stock price of $68.71 on Friday. Based on Gen-Probe's approximately 45 million outstanding shares, the deal is worth about $3.72 billion.
Gen-Probe shares soared nearly 19 percent, or $12.86, to $81.57 in Monday afternoon trading. In contrast, Hologic shares fell more than 10 percent, or $2.20, to $19.03.
The announcement came the same day the companies posted quarterly financial results. Bedford, Mass.-based Hologic reported a net loss of $40.3 million, or 15 cents per share, in its fiscal second quarter as expenses rose. Gen-Probe, based in San Diego, reported a 3 percent decline in its first-quarter earnings.
Hologic said the acquisition of Gen-Probe will establish it as a premier company in STD diagnostics.
Diagnostics tools will play a growing role in the future of medicine because they provide a way for doctors to identify and address problems at an early stage, before they becomes more difficult and expensive to treat, said analyst Steve Brozak, president of WBB Securities. He noted, for instance, that Gen-Probe makes a test for the human papillomavirus, which leads to cervical cancer.
He also noted that many people who have the STD chlamydia don't show symptoms or know they have it. Diagnostic testing, he said, "is the only reasonable vehicle for addressing that type of problem."