UPDATE: Inverness closes Standard Diagnostics buyout

February 1, 2010 by MassDevice staff

Inverness Medical Innovations Inc. (NYSE:IMA) is hitting the acquisitions trail hard in 2010.

The Waltham, Mass.-based diagnostics and lab equipment maker closed its deal to buy a three-quarters stake in Korean rapid diagnostics maker Standard Diagnostics (KDQ:066930) for up to $216.6 million.

Inverness bid about $35.72 per share for 75.79 percent or just more than 6 million shares of Standard Diagnostics, provided that at least roughly 2.4 million shares, or 30 percent of the total issued, were tendered.

Inverness said roughly 4.8 million shares were tendered by SD shareholders, representing about 62 percent of the company.

SD president and CEO Young Shik Cho (who's also the company's largest shareholder) tendered his 720,000-share stake in the firm as part of the deal. Now that the minimum tender mark has been reached, Inverness and Cho together own more than half of the company.

The $35.72 per share offer is a 33 percent premium over SD's 90-day trailing average of about $26.67. SD shares closed at about $33.39 Feb. 1. The bid is slated for settlement Feb. 8.

The run at Standard Diagnostics, which makes reagents and devices aimed at detecting hepatitis, infectious diseases, tumors, fertility and drugs, is the latest buyout bid for Inverness. The company inked a group of distribution-to-acquisition deals with Epocal Inc. last week that could lead to it paying $255 million for the of Ottawa, Canada-based blood testing equipment maker. That five-year arrangement starts with a deal for Inverness to sell Epocal's Epoc rapid blood gas and electrolyte analysis platform. Inverness paid $20 million for the right to distribute the system worldwide, except for Japan, India, Bangladesh, Nepal, Bhutan and Sri Lanka; a second agreement calls for the two companies to collaborate in expanding Inverness' portfolio of point-of-care testing platforms. The third and perhaps biggest deal will see Inverness pay a base price of up to $172.5 million to buy Epocal outright, contingent on that company achieving certain gross margin and financial milestones before Oct. 31, 2014. Epocal can add another $82.5 million to the purchase price if it meets other benchmarks, including product development and gross margin goals.

Inverness also bought British CRO Mologic in October, registering nearly 129,000 shares worth about $5 million held by a group of Mologic founders and managers.

IMA put some black in back on the ledger during the third quarter. The company logged a 22.1 percent increase in revenues compared with Q3 2008, largely on a jump in sales of its influenza diagnostic tests and contributions from acquisitions.

Inverness posted net income of $14.3 million on net sales of $535.8 million for the three months ended Sept. 30, compared with a net loss of $9.1 million on sales of $438.8 million during the same period last year. The company credited strong sales of products related to Swine Flu for the improvement.

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