Genetic-testing specialist Qiagen is buying its British peer DxS Ltd to expand its cancer diagnostics business and will raise its capital to fund the deal and possibly further takeovers.
Geramny's Qiagen agreed to pay $95 million in cash for DxS and may in addition pay up to $35 million if DxS reaches certain development goals, the company said late on Tuesday.
DxS offers genetic tests that determine, which patients are most likely to benefit from certain cancer treatments.
Qiagen is also active in that business and its products include tests that help identify those bowel-cancer patients who are most likely to benefit from Merck KGaA's anti-tumor drug Erbitux or from Amgen Inc's Vectibix.
Its main product is a test for the human papilloma virus (HPV), which can cause cervical cancer, but it also offers tests used in paternity disputes, drug research and flu diagnostics.
(DxS's) assets complement Qiagen's existing strong portfolio of personalized healthcare diagnostic solutions, the company said.
While the deal was set to diminish earnings per share (EPS) by $0.02 in 2010, it should increase EPS adjusted for special items in the following years, according to Qiagen.
In a separate statement, Qiagen said it was selling 27.5 million fresh shares in a capital increase and possibly another 4.1 million new shares as part of an over-allotment option.
Based on Tuesday's closing price, the measure would generate about 480 million euros ($710 million) in gross proceeds, but putting a stake of this size up for sale typically carries a considerable discount to the per-share market price.
The proceeds are earmarked to finance the DxS takeover, but would also be used for potential future acquisitions, to strengthen the balance sheet and for general corporate purposes, Qiagen added.
Pre-emptive rights of shareholders have been excluded for the offering, it said.
The order book for the new shares will open on Wednesday, 0700 GMT and are expected to close on Thursday 2000 GMT, Qiagen said. (Reporting by Ludwig Burger; editing by Andre Grenon)