Roche to buy Igen for $1.4 billion

JULY 25–NEW YORK–Roche Holding AG said it is buying Igen International Inc. for $1.4 billion, ending the companies’ six year legal battle over the license to Igen’s disease pathogen detection technology.

The offer of $47.25 a share gives Igen shareholders a huge premium to their shares, which were halted at $37.20 late Thursday.

Once Roche acquires Igen, the Swiss drug maker will spin out Igen as a new company, giving all existing shareholders an equal amount of shares in the new company. The new Igen will retain all the patents to the Origen technology.

Roche will also pour $155 million working capital into the new company.

With 26.7 million shares outstanding at $47.25 each and the $155 million, the deal is valued at $1.4 billion.

Basically, the deal gives Roche the permanent rights to use Igen’s Origen technology, a large part of Roche’s heavy revenue-generating human diagnostics business of Elecsys products. These are tests used in centralized laboratories, hospital labs and blood banks.

But Igen will be allowed to function as an independent business and even license the technology to Roche’s competitors.

Roche’s Elecsys products that use the technology had sales in 2002 of approximately $404 million, with a compound annual growth rate in local currencies of approximately 23% over the last three years.

Roche also agreed to immediately pay Igen $18.6 million in cash for compensatory damages as ordered by an appeals court earlier this month, as well as royalties owed for the fiscal first quarter ended June 30.

Effective immediately, Roche won’t owe any further royalties to Igen and will instead pay a fixed fee of $5 million a month for the use of Origen technology until the transaction closes, which is expected by year’s end.

In 1997, Igen alleged that Roche breached a contract relating to the rights to Igen’s Origen technology.

Earlier this month, an appeals court reversed a $505-million ruling against Roche relating to the battle. The Maryland court denied Igen damages of $486.8 million, while upholding an $18.6-million breach-of-contract claim, and ended the licensing pact.


Easily post a comment below using your Linkedin, Twitter, Google or Facebook account. Comments won't automatically be posted to your social media accounts unless you select to share.