Roche to buy remaining 46% of FMI for $2.4 billion

Swiss pharma giant Roche (ROG: SIX) has entered into a definitive merger agreement for Roche to acquire the outstanding shares of Foundation Medicines (Nasdaq: FMI) common stock not already owned by Roche and its affiliates at a price of $137.00 per share in cash.

Ahead of the announcement, FMI’s shares closed up 4.4% at $106.45 on Monday.

This corresponds to a total transaction value of $2.4 billion on a fully diluted basis, and a total company value of $5.3 billion on a fully diluted basis. This price represents a premium of 29% to FMI's closing price on June 18, 2018 and a premium of 47% and 68% to FMI's 30-day and 90-day volume weighted average share price on June 18, 2018, respectively. The merger agreement has been unanimously approved by the board of Roche and a Special Committee of the independent directors of FMI and by its full board of directors with the Roche designated directors abstaining from the deliberations and vote. All current members of the FMI board have indicated that they intend to tender their FMI shares in the tender offer.

Roche first acquired a 56.3% stake in FMI for $1.03 billion in 2015. The latest acquisition would “fit very well with Roche’s personalized healthcare strategy and its status as an early leader in this field,” wrote Stefan Schneider, analyst at Vontobel in Zurich, in a client note quoted by the Financial Times.