Medical Device Daily Associate

Millipore (Billerica, Massachusetts) and Serologicals (Norcross, Georgia) reported that their boards have approved an agreement for Millipore to acquire Serologicals for $31.55 per share, or about $1.4 billion, in an all-cash transaction which also includes the assumption of Serologicals debt.

The $31.55-a-share buyout price represents a 35.3% premium to Monday's $23.32 closing price on shares of Serologicals.

“This is an exciting and transformational transaction for Millipore,“ said Marin Madaus, president, CEO and chairman of the company during a conference call on the merger with Serologicals. “It will greatly strengthen our position as one of the leading franchises in the lifescience market and enhance our ability to provide long-term shareholder value,“ he added.

Millipore said it believes the combination will strengthen its bioscience division by giving it leading positions in high-growth segments such as drug discovery products and services, antibodies, cell biology reagents and stem cell research. The company also said it expects to increase sales of Serologicals' products in international markets such as Europe, Asia and Japan, where Millipore has a significant presence.

Additionally, the company said Millipore's bioprocess division will gain a cell culture supplements offering that will facilitate its entry into the $1 billion upstream bioprocessing market. As a result, it said it will be the only company in the industry that can offer both upstream cell culture and downstream separation offerings for biopharmaceutical production, which should further strengthen its relationships with biotechnology and pharmaceutical customers.

The transaction, which Millipore said it expects to close by June 30, is subject to Serologicals shareholder approval and other regulatory approvals. Assuming deal close by June 30, Millipore said it expects the acquisition to increase its 2006 earnings by 10 cents to 15 cents per share, excluding items, bringing its full-year earnings forecast to $3.00 to $3.10 per share.

David Dodd, president and CEO of Serologicals, will assist in the transition and will then depart from the company, according to the companies.

Millipore said it intends to finance the transaction with a combination of cash on hand and debt.

While the transaction is not subject to a financing condition, Millipore said it has obtained a commitment for the financing necessary to complete the acquisition from UBS Investment Bank which also is acting as Millipore's financial advisor in connection with the transaction. JP Morgan Securities is acting as Serologicals' exclusive financial advisor in connection with the transaction.

Assuming stable foreign exchange rates, Millipore said it believes '07 revenues for the combined company will grow between 9%-11% over '06 pro forma revenues.

The combined organization of about 5,800 employees will have expanded R&D capabilities and a worldwide sales and service organization of about 1,200 professionals selling a broad portfolio of complementary products.

“We are very excited about our acquisition of Serologicals because it is the perfect strategic fit,“ said Madaus. It will help us meet all of our strategic goals, [and] it brings important strategic value to both of our divisions.“

He noted that the Serologicals buy brings leading positions in neuroscience, stem cell research, multiplex platform technologies, nuclear function and drug discovery products and services.

While Madaus said he viewed the transaction largely as “complimentary“ with little overlap in the four businesses of Serologicals and Millipore, he did say there were still “significant cost savings to be generated by rationalizing corporate overhead and redundant functions,“ making it likely that there would be some facility closures and job reductions associated with the merger.

In other dealmaking news:

• Centene (St. Louis) reported that it has signed a definitive agreement to acquire the managed vision business of OptiCare Health Systems (Waterbury, Connecticut) for $7.5 million in cash through its specialty company subsidiary, CenCorp Health Solutions .

The OptiCare Managed Vision (Rocky Mount, North Carolina) division contracts with insurers, employer groups, managed care plans, HMOs and other third-party payors to manage claims payment and other administrative services of eye health benefits in 15 states and generated about $25 million in 2005 revenue.

The company said the transaction expands Centene's specialty capability to include vision benefit management as OptiCare's services will be available to Centene's Medicaid health plans and external customers.

The OptiCare Managed Vision business is expected to be neutral to 2006 earnings per share and to be accretive to Centene earnings per share within the first twelve months following the closing date. The transaction is subject to regulatory approvals and is expected to close in 3Q06.

Centene is a multi-line healthcare enterprise that provides programs and related services to individuals receiving benefits under Medicaid, including Supplemental Security Income and the State Children's Health Insurance Program. The company operates health plans in Indiana, Kansas, Missouri, New Jersey, Ohio, Texas and Wisconsin.

• Patient Safety Technologies (PST; Santa Monica, California) reported that it has engaged Ault Glazer Bodnar Securities, an investment banking firm affiliated with the company's former chairman, to assist the board of directors in exploring and evaluating a range of possible strategic opportunities and alternatives to maximize shareholder value, including acquisitions, financings, spin-offs or the sale, merger or joint venture of the company's wholly owned subsidiary SurgiCount Medical .

SurgiCount describes its safety-sponge system as working much like a grocery store check-out system. Every surgical sponge and towel is pre-labeled by the manufacturer with an individual and unique bar coded label, and a scanning counter is used to read and record the labels. No change is required in a hospital's established counting procedures: sponges are counted and recorded by the system at the beginning of the procedure and again as they are removed from the patient.

PST is a holding company with assets in various businesses.