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Roche (RHHBY) Inks Deal to Acquire GenMark Diagnostics for $1.8B

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Swiss pharma giant Roche Holding AG (RHHBY - Free Report) announced that it has entered into a merger agreement to acquire California-based GenMark Diagnostics at $ 24.05 per share in an all-cash transaction. On a fully-diluted basis, the transaction value stands at approximately $1.8 billion.

Per the press release, the price offered by Roche represents a premium of around 43% to GenMark’s closing share price on Feb 10, 2021. The deal is expected to close in the second quarter of 2021, subject to customary closing conditions. The merger has been unanimously approved by the boards of directors of both Roche and GenMark.

Shares of Roche have declined 6.4% so far this year compared with the industry’s decrease of 0.7%.

price chart for RHHBY


Per the agreement, following the completion of the tender offer, Roche will acquire all remaining shares at the same price in cash through a second step merger.

Notably, with the acquisition of GenMark, Roche is looking to strengthen and diversify its molecular diagnostics portfolio. The company is looking to include solutions that will provide lifesaving information to patients and healthcare providers to fight against infectious diseases as quickly as possible.

Importantly, GenMark’s respiratory pathogen panels identify common viral and bacterial organisms related to upper respiratory infection, including SARS-CoV-2, the virus that causes the COVID-19 infection. This is likely to complement Roche’s extensive portfolio of COVID-19 diagnostics solutions.

Please note that, in 2020, Roche developed 15 solutions for SARS-CoV-2 diagnosis including both molecular and immunodiagnostic tests for clinical laboratory and point of care. The company expects that these new tests, as well as the existing diagnostics menu for critical care, will continue to boost its Diagnostics division as large parts of the population are yet to be vaccinated and COVID-19 medicines are still not widely available.

Zacks Rank & Stocks to Consider

Roche currently carries a Zacks Rank #5 (Strong Sell).

Better-ranked stocks in the healthcare sector include Johnson & Johnson (JNJ - Free Report) and Zoetis Inc. (ZTS - Free Report) , both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Johnson & Johnson’s earnings estimates have been revised 6.6% upward for 2021 over the past 60 days. The stock has inched up 1.5% year to date.

Zoetis’ earnings estimates have been revised 4.8% upward for 2021 over the past 60 days.

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