COLLEGE PARK, Md. (AP) — Igen shares surged 59 percent Friday in response to news that Roche Holdings AG is buying the company for $1.4 billion. The takeover ends a long licensing dispute between the two over blood testing technology.
Switzerland-based Roche will get access to Igen's diagnostic process, known as Origen, that the companies have fought over in court since 1997.
For each of the 26.7 million shares of Igen, Roche will pay $47.25 and give Igen shareholders one share in a spin-off company that will hold the license to Origen. Roche will also give the as-yet unnamed company $155 million and get nonexclusive rights to Origen at no cost.
Igen's shares, which had closed regular trading Thursday at $37.20 before the deal was announced, surged $22.05 on Friday to $59.25 on the Nasdaq Stock Market.
The deal is expected to close by the end of the year if approved by Igen shareholders and by regulators.
A recent appeals court decision on the licensing fight allowed Igen to terminate its Origen license with Roche Diagnostics. That put Roche in a difficult position since much of its diagnostic sales — $404 million last year — are dependent on Origen.
Analysts said the deal favors Igen, since the new company will continue to hold the patent to Origen and be able to sign new licensing deals for the technology. The new company will also hold rights to Igen's other business in areas such as biodefense and life sciences.
"Igen wins clearly," said John Putnam, an analyst with Belmont Capital Harbor. "I don't think they could have done this any better."
Roche chairman and CEO Franz Humer said it was important for the drug company to end the legal fight and gain access to Origen, used in about 9,000 pieces of Roche laboratory equipment worldwide.
The takeover means both companies will operate independently, he said, allowing both to go in their own direction.
"In the end, we found this to be the most appropriate solution," Humer said.
Igen CEO Samuel J. Wohlstadter said the company was pleased to settle the dispute.
"The new company will have proven technology, businesses in many of the highest growth areas in diagnostics and an opportunity to establish strategic partnerships," he said.