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Basel, July 24, 2003
Roche to acquire Igen, securing rights to Igen's ECL-technology
Igen shareholders to receive $47.25 in cash per share and one share
of a new public company to be spun-off from Igen
Igen spin-off company will be 100% owned by Igen shareholders and
have ECL patents, historic Igen businesses, and approximately $155
million in working capital
Roche and Igen International Inc. jointly announced today that they
have reached definitive agreements to resolve their long-running
dispute on the rights to Igen's electrochemiluminescence (ECL) technology
used by Roche's diagnostics division. The transaction, which has
been approved by the Boards of Directors of Igen and Roche, will
enable both companies to independently maximize the value of their
respective technology assets.
Under the terms of the agreements, Roche will acquire Igen, thereby
securing rights to the ECL-technology used in its Elecsys diagnostics
product line. For each Igen share, Igen shareholders will receive
$47.25 in cash and one share of a newly formed public company to
be spun off from Igen. Igen has 26.7 million fully diluted outstanding
shares. The new company, which will be 100% owned by Igen shareholders,
will own the ECL-technology and have approximately $155 million
in working capital provided primarily by Roche as part of the transaction,
which is in addition to the $47.25 per share cash payment to Igen
shareholders.
Through the acquisition of Igen, Roche will secure new non-exclusive,
fully paid-up worldwide and perpetual rights which will permit Roche
to continue to commercialize the ECL-technology in the human in-vitro
diagnostics field and continue to sell and further develop its Elecsys
products for centralized laboratories, hospital labs and blood banks.
In addition, subject to certain limitations, Roche will be able
to sell ECL-based immunochemistry systems into point of care sites
and physicians offices. Improvements of the ECL technology developed
by Roche will remain with Roche. As reported by Roche, Roche's ECL-based
Lab Diagnostics business had sales in 2002 of approximately CHF
560 million (US $404 million) with a compound annual growth rate
in local currencies of approximately 23% over the last three years.
Upon completion of the acquisition, the new company to be spun-off
to Igen shareholders will immediately hold Igen's patents and the
historic operations related to Igen's biodefense, life science,
industrial and clinical testing businesses, as well as Igen's equity
interest in the Meso Scale Diagnostics joint venture. The new company
will be able to address the entire clinical diagnostic, blood bank
and reference lab markets that were previously exclusively held
by Roche. The new company will also receive rights to certain improvements
relating to Roche's Elecsys product line and royalty-bearing licenses
to PCR, a nucleic acid amplification technology, for use in most
fields. The new company, which will be named prior to closing the
transaction, will be managed by Igen's current management team and
headquartered in Gaithersburg, Maryland. The company is expected
to be listed on Nasdaq after completion of the acquisition and the
spin-off.
As part of the agreement, Roche will immediately pay Igen $18.6
million in cash for compensatory damages as confirmed on July 9,
2003 by the U.S. Court of Appeals for the Fourth Circuit. Roche
will also immediately pay to Igen the royalties owed to Igen for
the quarter ended June 30, 2003. Effective immediately, there will
be no further royalties owed to Igen, and Roche will pay a fixed
fee of $5 million per month to Igen for the use of the ECL-technology
until the transaction closes. As part of the transaction, the new
company will make capital contributions of $37.5 million to Meso
Scale Diagnostics.
The transaction is expected to close by calendar year-end, subject
to the approval of Igen shareholders and receipt of necessary regulatory
approvals and other limited closing conditions.
Franz B. Humer, Chairman and CEO of Roche, said, "We are very
pleased with the result of these negotiations. Through this acquisition,
we have been able to resolve this legally and contractually highly
complex dispute in the best interest of both companies and their
shareholders. I am convinced that we have achieved a clear win-win
situation for all parties involved. Roche will be able to provide
unrestricted access to all its diagnostics products for all its
customers, and Igen's shareholders are offered an attractive price
and will own a solid business with excellent prospects. Putting
this long period of uncertainty to an end will allow both Roche
and the new spin-off company to fully focus on their respective
businesses and to further develop them independently of each other."
Samuel J. Wohlstadter, Igen's Chairman and Chief Executive Officer,
said, "We are extremely pleased to have reached a definitive
agreement with Roche that delivers significant immediate value to
our shareholders as well as the opportunity to create additional
value through ownership of a well-positioned new growth company
that will own Igen's patented Origen technology. The new Company
will have proven technology, businesses in many of the highest growth
areas in diagnostics and the opportunity to establish strategic
partnerships with a wide range of companies in the global marketplace."
Heino von Prondzynski, Head of Roche Diagnostics and a member of
Roche's Corporate Executive Committee: "This is an important
day for Roche Diagnostics, our customers, physicians and patients.
The transaction ensures that patients can be diagnosed without any
interruption. Based on today's agreements, we now have a solid platform
to offer our outstanding technology throughout the world. We would
like to thank our customers for their loyalty during this difficult
time of uncertainty. We are committed to further develop our lab
diagnostics products business and drive our share in the highly
attractive immunodiagnostics market."
Dr. Richard Massey, President and Chief Operating Officer of Igen,
said, "We believe the new company will be extremely well positioned
to meet customers' evolving needs in the global biodefense, life
science, industrial and clinical testing markets. The strong businesses
established by Igen will be enhanced with the improvements from
Roche. Our rapidly growing biodefense business can utilize the PCR
technology to develop an expanded range of products. We can also
leverage PCR technology in the development of DNA tests for the
global clinical testing markets."
The announcement of this agreement follows a July 9, 2003 ruling
by the U.S. Court of Appeals for the Fourth Circuit in litigation
that began in 1997 when Igen filed a lawsuit charging Boehringer
Mannheim with multiple breaches of a license agreement relating
to Igen's ECL-technology. The ruling eliminated damages of $ 486.8
million previously awarded to Igen by the jury of the District Court
of Maryland while affirming Igen's right to terminate the license
agreement between the companies. Roche inherited the case in its
acquisition of Boehringer Mannheim in 1998. As part of today's agreements,
Igen has agreed to suspend its patent infringement actions against
Roche in Maryland and Germany pending consummation of the proposed
acquisition, with the right to resume the actions should the transaction
not close. Both companies have also agreed not to file any further
appeals of the opinion issued by the Fourth Circuit.
About Igen International Inc.
Igen develops and markets biological detection systems based on
its proprietary Origen technology, which provides a unique combination
of sensitivity, reliability, speed and flexibility. Origen-based
systems are used in a wide variety of applications, including clinical
diagnostics, pharmaceutical research and development, life science
research, biodefense testing and testing for food safety and quality
control. These systems are marketed globally by Igen and its licensees
and/or distributors. Igen is based in Gaithersburg, Maryland with
offices in San Diego, California and Witney, England.
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