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."
Because of this expected growth in demand for diagnostics, Hologic had "no choice" but to make this deal, the analyst said.
Last year, instrument maker Thermo Fisher Scientific Inc. agreed to spend about $3.5 billion in cash for the privately held Swedish company Phadia, which makes blood test systems for allergy and auto-immune diseases. Medical and industrial instruments maker Danaher Corp. also agreed to buy Beckman Coulter Inc. for about $5.87 billion. Beckman Coulter makes products that simplify and automate biomedical testing.
Hologic said it expects the addition of Gen-Probe to boost its adjusted earnings by about 20 cents in the first fiscal year after the deal closes and significantly more after that. The companies expect the deal to close in the second half of this year.
Hologic's loss in the quarter that ended March 24 compares to net income of $82.4 million, or 31 cents per share, in the same quarter a year ago. Revenue climbed more than 7 percent to $471.2 million, but costs and expenses jumped 63 percent to $461 million.
Adjusted earnings, which exclude several one-time charges and gains, were 33 cents per share.
Analysts expected Hologic would earn 33 cents per share on revenue of $474 million, according to a FactSet survey.
In its earnings report, Gen-Probe said its first-quarter net income fell to $22.5 million, or 49 cents per share. Total revenue grew 7 percent to $153.4 million, and adjusted earnings were 55 cents per share.
Analysts expected adjusted earnings of 51 cents per share on $150.7 million in revenue from Gen-Probe.
AP Business Writer Bree Fowler contributed to this report from New York.