Medical Device Daily Executive Editor

Inverness Medical Innovations (IMI; Waltham, Massachusetts) can claim that it knocked one out of the park last week with its close of the purchase of Biosite (San Diego) and thus winning the bidding game vs. Beckman Coulter (BC; Fullerton, California) to acquire the company.

But it then could claim that it turned the home run into a grand slam, with its follow-on report that it had formed a new joint venture company with healthcare powerhouse Procter & Gamble (P&G; Cincinnati).

On the heels of its completing the acquisition of Biosite with the winning bid of $92.50 a share (about $1.64 billion in total value) for the shares it does not already own, IMI said it will collaborate with P&G to create SPD Swiss Precision Diagnostics GmbH, which will be based in Geneva, Switzerland

With closing of the j-v agreement, IMI contributed its related consumer diagnostic assets, other than its manufacturing and core intellectual property assets, while P&G acquired IMI's interest in the j-v for about $325 million in cash.

Doug Guarino, a spokesman for IMI, said that the two deals were not linked, in terms of one being a condition for closing of the other. The announcements of the Biosite purchase and deal with P&G, he told Medical Device Daily, were "coincidental." He added, however, that "Once the bid was made and the banks new that that money was coming in [from P&G], they wanted to apply it toward the purchase" of Biosite.

The j-v effort, previously disclosed this past December, will result in a 50/50 ownership of the new company that will develop, manufacture and market "existing and to-be-developed consumer diagnostic products, outside the cardiology, diabetes and oral care fields," the companies said.

IMI said that the addition of SPD will be "accretive" to earnings, but Guarino said the company isn't laying out any guidance as of now. Rather, he said that IMI will say "a little bit more over the coming weeks, [giving] more insight into the synergies that the deal proposes to us."

Hilde Eylenbosch, CEO of SPD, who has joined the new management team from Inverness, said, "As we have progressed in our work to close, we have already started to see synergies that will allow us to become an increasingly important player in the growing self-care market."

Ricccardo Guitart, who joined the new management team from P& G and will serve as its CFO, called the j-v "a compelling strategic transaction and an excellent opportunity for P&G, Inverness and our business partners."

SPD has more than 160 employees and will have a site in Bedford, UK, besides its Geneva headquarters.

Professional diagnostics will continue to be managed exclusively by IMI.

IMI was represented in the transaction by Goodwin Procter LLP, while Covington & Burling LLP represented The Procter & Gamble Company.

As to the merger with Biosite, Ron Zwanziger, president/CEO and chairman of IMI, said his company will "quickly leverage Biosite's strength in proprietary protein markers and robust cardiovascular platform, together with our ongoing research and development efforts in the cardiac arena…. [W]e look forward to working closely with Biosite as we consummate this transaction and begin what we anticipate to be a smooth integration process."

Kim Blickenstaff, CEO and chairman of Biosite, said that the agreement to merge into IMI "provides an increased all-cash premium to our stockholders and reflects Inverness' strong commitment to the transaction. Inverness' interest in the company is a testament to the value our loyal and dedicated employees have created"

Biosite terminated the merger agreement it previously entered into with Beckman Coulter and its acquisition subsidiary in accordance with its terms.

IMI said it will "promptly" commence a tender offer for all of Biosite's outstanding common that it does not already own.

The offer is conditioned upon at least a majority of the outstanding Biosite shares being tendered, as well as the satisfaction of regulatory and other customary conditions. Approval of the transaction by Inverness' stockholders is not required.

In the event that the tender offer is not closed by July 3, Biosite's shareholders will receive $0.015205 a share for each day following July 3, 2007 until the date on which the tender offer is closed.

The transaction is currently expected to close at the end of 2Q07 or early in 3Q07.

UBS Investment Bank is acting as financial advisor to IMI and dealer manager for the proposed tender offer. Covington Associates is acting as financial advisor to IMI and Goldman, Sachs & Co. is acting as financial advisor to Biosite.

Goodwin Procter is serving as legal counsel to IMI, and Cooley Godward Kronish and Potter Anderson & Corroon are serving as legal counsel to Biosite.