Digene, Local Maker of HPV Test, to Be Sold to Dutch Firm

Digene Corp., a Gaithersburg firm that sells a screening test for a virus that causes cervical cancer, announced a deal yesterday to sell itself to a Dutch company for approximately $1.6 billion in cash and stock.

The deal with Qiagen NV, a global player in molecular diagnostics technology, comes as Digene has been seeking to expand its business internationally. The company is also facing a competitive threat from diagnostics giant Roche AG, which wants to sell its own test in the United States for the detection of human papillomavirus, or HPV.

Digene chief executive Daryl Faulkner, who began running the company late last year, said that in terms of international expansion, the deal with Qiagen "gets us there faster than doing it alone."

"They have a footprint in places we don't," Faulkner said. "They've been around a long time, particularly in Asia."

While the deal is between two companies that have their headquarters thousands of miles from each other, in many ways it is a merger of friendly neighbors. The companies have collaborated on projects for more than a decade. Also, Qiagen's U.S. operations are based about two miles from Digene, in Germantown.

While the companies said it was too early to say whether there would be job losses for Digene employees, Qiagen's chief executive, Peer Schatz, said his company intends to retain talent and share operational infrastructures. Digene employs about 600 people.

The combined companies will be called Qiagen, and Schatz will remain chief executive. Faulkner will co-chair an integration committee.

Under terms of the deal, which is scheduled to close by September, Digene shareholders can elect to receive 3.545 shares of Qiagen stock for each Digene share owned or $61.25 a share in cash. The cash amount represents a 37 percent premium on Digene's share price on Friday. The boards of both companies unanimously approved the deal.

Digene is the second life sciences company in the region to be bought by an international firm in less than two months. In April, MedImmune agreed to be bought by AstraZeneca for $15.6 billion, and that deal is expected to close later this month. MedImmune will become an AstraZeneca subsidiary.

The Qiagen deal caps a tumultuous year for Digene, one of the region's few profitable life sciences companies. Evan Jones and Charles Fleischman, two college friends who rescued the company from financial turmoil 17 years ago, both stepped aside in 2006.

Jones, the former chief executive, retired because he said the company needed different leadership for the next stage of growth, which would likely come internationally. Fleischman, the firm's former president, resigned after he was passed up for the top job.

A Digene spokeswoman said Jones would not be made available for comment. Fleischman could not be reached. It was not immediately clear yesterday how many Digene shares the two men still control.