Roche expanding its diagnostics business with $11 billion takeover
ERNST E. ABEGG
May. 26, 1997
BASEL, Switzerland (AP) _ Swiss pharmaceutical giant Roche Holding will buy holding company Corange Inc. for $11 billion in a deal that will make it a world leader in the medical diagnostics business.
Roche announced Monday it will takeover Corange's holdings in Germany's Boehringer Mannheim, a market leader in cardiovascular and cancer treatments. It will also gain an 84.2 percent stake in DePuy, a Warsaw, Ind.-based producer of orthopedic products.
Layoffs were expected, but Roche declined to give any specific figures. The Swiss industrial labor union GBI said it feared job cuts of 15 percent from the 70,000 workers now employed at the combined companies.
The merger will boost Roche's drug operations to sixth worldwide from its current 10th-place ranking. That would close some of the gap created last year when Roche's two cross-town rivals _ Ciba Geigy and Sandoz _ merged into the world's largest drug company, Novartis.
Roche said the final price of its deal was subject to negotiation. The takeover requires approval by regulatory authorities.
Roche, the maker of Valium and the AIDS-fighting drug Invirase, had profits of $2.8 billion and sales of $11.4 billion last year, with diagnostic products contributing 5 percent to its total sales. Its workforce tops 50,000.
Boehringer Mannheim, employing 18,000 people, had annual sales of about $3 billion last year. Boehringer Mannheim has long been a leader in diagnostic tests. In 1956 it introduced Glucotest, the first urinary test strip for diabetics to use at home. It launched Reflotron, an on-the-spot blood-testing system, in 1985.
Roche Chairman Fritz Gerber said the addition of Boehringer Mannheim would add $2 billion in diagnostics sales. Its diagnostic unit will now be known as Roche Boehringer Mannheim Diagnostics.
DePuy is one of the world's biggest manufacturers of orthopedic products and artificial limbs. Employing 2,900 workers, it had revenues last year of $693.5 million.
Gerber said the DePuy acquisition ``opens the door to a new segment of the healthcare market with growth potential.''
Roche finance chief Henri B. Meier said he expected the takeover would soon have a ``positive effect'' on earnings, but that in the current year it will ``dilute'' profits.
Roche Holding AG is the parent of a major Swiss chemical and pharmaceuticals group. The group's four main divisions include pharmaceuticals, vitamins and fine chemicals, diagnostics and fragrances. Hoffmann-La Roche Inc. is its U.S. division, based in Nutley, N.J.