San Diego-based Sequenom is flexing some of its newfound muscle, by making a takeover bid for Marlborough, MA-based Exact Sciences while it is on the ropes.
Sequenom (NASDAQ: SQNM) said today after markets closed it is offering $1.50 worth of its own stock in exchange for each share in Exact Sciences (NASDAQ: EXAS). That values Exact Sciences at about $41 million, or about a 51 percent premium over today’s closing stock price of 99 cents. Sequenom, the developer of a non-invasive genetic test for Down’s Syndrome, says it wants to obtain the pioneering genetic test of stool samples that Exact Sciences has developed to spot early signs of colorectal cancer.
Sequenom is in position to make the offer after a banner 2008 in which its test showed it was 100 percent accurate in detecting Down’s Syndrome without the risks of more invasive standard procedures like amniocentesis. The company’s stock more than doubled, enabling it to amass a war chest of $114 million in cash at the end of September. Exact Sciences went in the opposite direction last year as its stock crashed 82 percent amid signs of financial distress, with a $3 million third quarter net loss. It had about $6 million in cash left at the end of September.
The statement from Sequenom doesn’t include any detail on whether the companies tried to work something out behind the scenes, but Sequenom is clearly making a public appeal to drum up support for the bid. It must be painful for Exact Sciences’ shareholders, whose stock was valued at more than $3 a year ago, more than double Sequenom’s offer.
“We believe our proposal to acquire Exact Sciences represents a compelling opportunity for both companies and our respective stakeholders,” said Harry Stylli, Sequenom’s CEO, in a statement. “We believe the proposed transaction would provide Exact Sciences’ shareholders with a very attractive premium to the current stock price, with greater liquidity and the opportunity to participate in the future growth of Sequenom.”
A spokeswoman for Sequenom added: “Sequenom believes it is important to make their proposal and the related process transparent to EXACT shareholders. The EXACT Sciences Board is believed to be pursuing alternatives which may not be as attractive as our proposal. We hope that by taking our proposal public, the Board and management of EXACT Sciences will seriously consider our proposal.”
That should provoke an interesting conversation among the Exact Sciences directors. A spokesman for Exact Sciences didn’t immediately respond to a request for comment. Sequenom has scheduled a conference call at 9 am Eastern time on Monday to discuss the bid with investors.