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Roche Diagnostics to acquire Disetronic's Infusion Systems

BaselTuesday, February 11, 2003, 08:00 Hrs  [IST]

The Roche healthcare group and medical device supplier Disetronic announced plans for Roche to acquire Disetronic, the world's second-biggest maker of insulin pumps. Within the next few weeks Roche will offer shareholders two Roche non-voting equity securities (Genussscheine) and 670 Swiss francs in cash for each Disetronic share. Based on current estimates, the cost of the acquisition is expected to amount to 1,6 billion Swiss francs, which represents a premium of around 55 per cent over Disetronic's closing price on 7 February 2003. The deal will make Roche Diagnostics a leader in integrated diabetes management. Roche is already the world's top provider of diabetes monitoring systems. By combining the two businesses, Roche will be able to offer comprehensive diabetes management solutions, from blood glucose meters for self-monitoring to sophisticated, programmable insulin pumps that allow patients to continuously administer insulin doses according to their individual needs. Roche's global presence and experience will provide an optimal platform for further growth in the insulin pump market (including accessories), currently valued at approximately 700 million Swiss francs, with an average growth rate of 11 per cent. Headquartered in Burgdorf, Switzerland, the Disetronic Group is one of the world's leading suppliers of infusion and injection systems. After the transaction is finalised, Disetronic's Infusion Systems division will become part of Roche Diagnostics' Diabetes Care unit. Infusion Systems posted sales of 178 million Swiss francs in the first nine months of its 2002/2003 business year (April to December 2002), an increase of 11 per cent in local currencies over the year-earlier figure. Disetronic's headquarters will become an important centre in the Roche Diabetes Care network. Roche will not acquire the smaller of Disetronic's two divisions, Disetronic Injection Systems AG, which recorded sales of 62 million Swiss francs in the first nine months of its 2002/2003 business year (April to December 2002), an increase of 25 per cent in local currencies. Disetronic Injection Systems will be sold to Disetronic's founder, Chairman and Delegate to the Board of Directors and principal shareholder and will continue to operate as an independent company. The proposed acquisition has the support of Disetronic's board of directors. It is subject to approval by competition authorities and by a special meeting of Disentronic's shareholders. For the acquisition to take place, Roche's offer must be accepted by at least 80 per cent of Disetronic's shareholders. The combination of these two businesses will make it possible to develop a more integrated approach to diagnosing, treating and monitoring diabetes. For Roche, acquiring Disetronic is an opportunity to strengthen its position in diabetes management. The companies' combined technological know-how and experience in marketing and sales has the potential to stimulate additional growth, which will have a positive impact on market share, particularly in the United States. Disetronic is the number two supplier of insulin pumps in the United States, and the market leader in Europe. Commenting on the proposed acquisition, Roche chairman and CEO Franz B. Humer said: 'The combination of these two businesses is another clear signal of our commitment to implementing the strategy we have mapped out for Roche. We are pursuing a course of steady growth, with a focus on high-potential therapeutic areas that can be served by our core Pharmaceuticals and Diagnostics divisions. Increasingly, our emphasis is on developing integrated healthcare solutions that combine therapeutic and diagnostic products and services that can be used in tandem to help tailor medical care to individual patients' needs.' Willy Michel, chairman and Delegate to the Board of Directors of Disetronic: 'Roche is the ideal partner to help us drive growth, particularly in the US market. Our companies' products and competencies are uniquely complementary. Roche Diagnostics' tremendous strength in marketing and sales will enable us to expand our global business substantially, particularly in the key US market. In the numerous discussions we've had with Roche, I've also noticed how similar our corporate cultures are. The Burgdorf site will gain in international importance, not least because of the region's universities and technical colleges, which help to promote and maintain an exceptionally high skill base in medical technology and microtechnology.' Heino von Prondzynski, Head of Roche Diagnostics and a member of Roche's Executive Committee: 'Bringing our two businesses together will make us pioneering leaders in systems combining blood glucose monitoring and insulin delivery. This is the ideal way to link diagnosis and therapy for people with diabetes. From a business perspective, merging Disetronic with our Diabetes Care unit is also an ideal move, since it will result in positive synergies in sales, while staff overlap is minimal.' Diabetes is a metabolic disorder in which the pancreas does not produce any insulin or produces too little. The number of people affected is growing rapidly. Because cells need insulin to absorb blood sugar (glucose) for their energy needs, the cells of people with diabetes suffer from a shortage of glucose, while glucose levels build up in the blood. Worldwide, there are currently 150 million people living with diabetes. And the WHO estimates that this figure will roughly double, to around 300 million, by the year 2025. Diabetes can lead to a number of serious conditions and complications, including hypertension, abnormal fat metabolism, blindness, kidney disease, heart attack, stroke and blood vessel damage that can block blood flow to the limbs and may necessitate amputation. These complications can be prevented or markedly reduced by regular blood glucose monitoring and prompt professional care.

 
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