In a move that appears very reminiscent of Boston Scientific's (Natick, Massachusetts) last minute solicitation to buy Guidant (Indianapolis) and thus elbow out Johnson & Johnson (New Brunswick, New Jersey) two years ago, Biosite (San Diego) yesterday reported that it received an unsolicited letter from Inverness Medical Innovations (IMI; Waltham, Massachusetts) indicating that it is prepared to best Beckman Coulter's (BC; Fullerton, California) $1.55 billion offer by $5 a share.

The sweeter offer came just a day after BC initiated its tender offer for Biosite's shares and a little over a week since BC first announced its pending blockbuster acquisition for Biosite (Medical Device Daily, March 27, 2007).

Biosite said that IMI indicated it is prepared to offer to acquire all of Biosite's outstanding common stock, other than the roughly 4.9% of Biosite shares it already owns, in a cash merger for $90 per share.

Biosite's board said it is evaluating IMI's letter, with the assistance of its financial advisor, Goldman Sachs & Co., and its legal advisors, Cooley Godward Kronish and Potter Anderson & Corroon.

Inverness indicated that this offer did not come out of thin air.

In a letter to Biosite's board, Ron Zwanziger, IMI's president/CEO and chairman, pointed out that executives from Inverness "have made repeated attempts over the past 10 months to engage the Biosite management team and board in a meaningful dialogue about a potential combination of our two companies." He said that as recently as February 20, Inverness submitted a proposal to acquire Biosite and subsequently entered into a confidentiality agreement for the express purpose of working with Biosite to explore the possibility of enhancing that offer. "We were therefore extremely surprised and disappointed by your announcement on March 25 of an agreement with Beckman Coulter," he added.

Zwanziger noted that the offering price represents a 63% premium above Biosite's closing share price on Friday, March 23 (the last trading day before the announcement of the agreement with Beckman Coulter) and a further premium above BC's offer, as well as Biosite's current share price.

He said that while IMI would "prefer to work with the Biosite board," his company is "prepared to bring our proposal directly to your shareholders" if they didn't hear back from Biosite by April 8.

Inverness' letter further indicates that Inverness and its proposed financing sources would require additional due diligence of a confirmatory nature which could be completed during a period of two full days, and that Inverness is prepared to deliver a draft cash merger agreement promptly following this due diligence.

Beckman Coulter reiterated what it said is "its firm commitment to complete its acquisition of Biosite^" in the next 30 days. "

"Beckman Coulter is proceeding, as planned, with a fully financed, cash offer for Biosite that is clearly superior to the unsolicited, highly speculative and conditional letter that Biosite has received from Inverness Medical Innovations," said Scott Garrett, BC's CEO and chairman. "The certainty and near-term completion date that characterize Beckman Coulter's offer stand in stark contrast to the highly conditional Inverness letter that has proposed additional due diligence, negotiation of a merger agreement, a shareholder vote and contingent financing."

He added that these steps would take months to complete, "if, in fact, Inverness is able to finance an acquisition which the highly conditional nature of its claimed 'commitments' leaves very much in question."

Biosite however, said Inverness is offering "substantially similar business terms" to Beckman's offer.

Beckman Coulter has had a business relationship with Biosite over the past four years in the area of B-type Natriuretic Peptide, a test that aids in the diagnosis, risk stratification and assessment of severity of heart failure and the risk stratification of patients with acute coronary syndromes. It combines Beckman Coulter's laboratory instrument systems, with Biosite's near-patient tests.

Garrett also noted that Beckman Coulter has the resources to invest in Biosite's future, "and will maintain and expects to grow the center of excellence that Biosite has established in San Diego as we together form a leadership position in immunoassay testing, especially within cardiac diagnostics."

BC's tender offer for Biosite shares is set to expire on April 27, unless extended.