Are FMI Shareholders Getting Enough in the Roche Acquisition?

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Foundation Medicine Inc. (NASDAQ: FMI) shares saw a sizable jump early on Tuesday after the company announced that Roche would be acquiring all the outstanding shares. The closing of the transaction is expected to take place in the second half of 2018.

Under the terms of the agreement, Roche will pay $137 per share in an all-cash transaction. This corresponds to a total transaction value of $2.4 billion on a fully diluted basis, as well as 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 Monday, and a premium of 47% and 68% to FMI’s 30-day and 90-day volume weighted average share price, 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.

Daniel O’Day, CEO of Roche, commented:

This is important to our personalised healthcare strategy as we believe molecular insights and the broad availability of high quality comprehensive genomic profiling are key enablers for the development of, and access to, new cancer treatments. We will preserve FMI`s autonomy while supporting them in accelerating their progress.

Shares of Foundation Medicine traded Tuesday morning up more than 28% at $136.52, with a consensus analyst price target of $80.75 and a new 52-week range of $31.70 to $137.20.