Hologic to Buy Cytyc for $6.2 Billion

By CHARLES FORELLE
May 21, 2007 - Hologic Inc. has agreed to buy Cytyc Corp. for $6.2 billion in cash and stock, in a deal that combines two major players in women's health care.

Executives of both companies say the tie-up will increase the opportunity for sales representatives to win over obstetricians and gynecologists, who are critical to recommending that patients use the companies' products.

"The OB/GYN is the one person a woman listens to and takes advice from," says Jack Cumming, Hologic's chief executive. Mr. Cumming says the combined company will have 425 sales representatives in the U.S. dedicated to calling on OB/GYNs.

Cytyc, which is the leader in the market for Pap smears, also makes devices to treat uterine bleeding and to deliver radiation therapy in breast-cancer patients. Hologic's major product is a digital mammography tool.

Hologic is based in Bedford, MA, about 15 miles from Cytyc in Marlborough, Mass. Mr. Cumming and Patrick Sullivan, the Cytyc CEO, live in the same town.

Mr. Cumming says the two companies have long crossed paths, given their similar markets and physical proximity. "In many regards, this combination has been a long time coming," said Mr. Sullivan, who will become Hologic's chairman. Mr. Cumming will continue as CEO.

Cytyc's traditional Pap smears makes up the bulk of its business-about 40% of the company's sales. But that segment is slower-growing than Cytyc's medical devices. Hologic, which once relied heavily on osteoporosis screening, has seen considerable success with digital mammography, which arrived by way of an acquisition about five years ago.

Hologic shares have risen some seven-fold in five years. By market-capitalization, Hologic is the smaller company, but thanks to the magic of leverage, it is the acquirer. Hologic will pay 0.52 Hologic shares, valued at about $29.96 as of Friday's closing price, plus $16.50 in cash for each share of Cytyc.

Hologic will borrow the $2.2 billion necessary to pay the cash portion of the acquisition. Overall, Hologic is paying $46.46 per share of Cytyc, a premium of 33% to Cytyc's closing price Friday.

Source: The Wall Street Journal Online, www.wsj.com