By Lisa Kerner
Charlotte, N.C., May 21 - The boards of directors of Hologic, Inc. and Cytyc Corp. agreed to combine the companies in a cash and stock transaction slated to be complete in the third quarter of 2007.
The agreement calls for Cytyc shareholders to receive 0.52 of a share of Hologic common stock and $16.50 in cash for each share of Cytyc common stock they own, for a total consideration of about $46.46 per share. Cytyc shareholders will receive a total consideration of about $6.2 billion, consisting of an estimated 69 million shares of Hologic common stock and $2.2 billion in cash, assuming the conversion of Cytyc's outstanding convertible notes.
Hologic shareholders will own approximately 45% of the combined company.
Cytyc will become a wholly owned subsidiary of Hologic. The combined company will maintain Hologic's location in Bedford, Mass., and Cytyc's offices in Marlborough, Mass.
Hologic has secured fully committed debt financing for the cash portion of the consideration from Goldman Sachs. In addition, Hologic and Cytyc expect their strong combined cash flows to support rapid repayment of some $2.3 billion of debt.
Upon termination of the agreement under specified circumstances, Cytyc may be required to pay Hologic a termination fee of $50 million or $150 million; or Hologic may be required to pay Cytyc a termination fee of $33 million or $100 million , depending on the termination event, an 8-K filing with the Securities and Exchange Commission stated.
"By combining our companies' complementary, best-in-class products and technologies, we expect to drive enhanced growth and value creation," Hologic's chairman and chief executive officer Jack Cumming said in a company news release. "Both Hologic and Cytyc have a track record of successfully executing on strategic transactions, and we expect to realize the benefits of this combination quickly and efficiently."
The new $10 billion global women's health care company will operate under the name Hologic and will offer brands including ThinPrep, Lorad, NovaSure and FullTerm. Hologic will have direct operations in over 20 countries with more than 3,300 employees. Annual cost savings from the transaction are expected to be $25 million to $30 million from enhanced efficiency of sales and marketing efforts, increased purchasing scale, sourcing and logistics efficiencies and shared administrative services, the companies said.
Cytyc's chairman, president and chief executive officer Patrick Sullivan will become chairman and Cumming will become chief executive officer of the new company. The company's board will include 11 members, with 6 nominated by Hologic and 5 nominated by Cytyc.
Goldman, Sachs & Co. is advising Hologic, with Brown Rudnick Berlack Israels LLP as legal counsel. Jefferies & Co., Inc. is providing a fairness opinion to Hologic. Morgan Stanley is advising Cytyc in cooperation with JPMorgan Chase & Co., and Hogan & Hartson LLP is legal counsel for Cytyc.
Hologic develops and manufactures diagnostic and medical imaging systems used in women's health care.
Cytyc develops and manufactures diagnostic and surgical products used in cancer and women's health screenings and treatments.
| Acquirer: | Hologic, Inc.
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| Target: | Cytyc Corp.
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| Transaction value: | $6.2 billion
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| Price per share: | $16.50 plus 0.52 of a Hologic share; or about $46.46
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| Announcement date: | May 21
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| Termination fee: | $33 million to $150 million, depending on the termination event
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| Expected closing: | Third quarter of 2007
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| Stock price for acquirer: | Nasdaq: HOLX: $57.61 on May 18
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| Stock price for target: | Nasdaq: CYTC: $35.05 on May 18
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