Waltham biotech in hostile $1.6b bid

In a fresh bidding war in the life-science industry, Inverness Medical Innovations Inc. of Waltham launched a hostile offer to buy a California company for $1.6 billion, potentially snatching it away from California instrumentation giant Beckman Coulter Inc.

Inverness, which makes home-pregnancy tests and medical diagnostic kits, offered $90 a share to buy Bio site Inc. , also a diagnostics maker. That price would trump a friendly $85-per-share deal with Beckman Coulter.

Once a rarity among medical companies, bidding wars have begun to erupt recently. Last fall, Genzyme Corp. beat out Millennium Pharmaceuticals Inc. to buy a small Canadian drug maker. And a year ago, Boston Scientific Corp. closed its $27 billion acquisition of Guidant Corp. after winning a high-profile bidding war with Johnson & Johnson.

Inverness is now trying to interrupt a friendly deal disclosed 12 days ago, when Beckman Coulter said it had signed an agreement to buy Biosite for $1.55 billion .

Inverness and Beckman Coulter are dueling chiefly over Biosite's expertise in cardiology testing. The San Diego firm makes a sophisticated array of devices that can quickly determine whether a patient is suffering congestive heart failure or a serious cardiac event.

This week, Inverness chairman and chief executive Ron Zwanziger sent a letter to Biosite's board of directors saying his company had been trying to negotiate an acquisition deal with Biosite for 10 months, and had "serious concern" about being boxed out of the process. According to the letter, dated April 4 and filed yesterday with the Securities and Exchange Commission, Inverness made an offer to buy Biosite on Feb. 20 and signed a confidentiality agreement to discuss the offer.

Inverness executives were expecting to meet with Biosite's leaders on March 27, the letter said, and were "extremely surprised and disappointed" when, two days before their planned meeting, Biosite said it was being bought by Beckman Coulter. A Biosite spokeswoman said last night that the company would not comment on the letter. In another filing this week, however, Biosite said it had been in talks with several other companies before signing the Beckman deal.

The new offer gave a further boost to Biosite's stock, which had soared in the two weeks since the Beckman Coulter deal was disclosed. At $85 a share, the Beckman Coulter offer represented more than a 50 percent premium over Biosite's previous closing price. Inverness's $90-per-share offer drove Biosite higher still. The stock closed at $93.11 yesterday, suggesting Wall Street expects the bidding war to continue.

Beckman Coulter's stock dropped 3 percent yesterday, losing $1.80 to close at $63.51. Inverness shares lost $2.99, or 7 percent, to close at $41.82.

With a market value of less than $2 billion, Inverness is about half the size of Beckman Coulter -- and not much larger than Biosite. Inverness already owns almost 5 percent of Biosite and proposed to buy the remaining shares with a combination of cash and loans.

Inverness said it has lined up financing from General Electric Capital Corp. and UBS Finance, but the loans would require two days of due diligence. The merger would also require the approval of Biosite's shareholders.

Inverness gave Biosite's board of directors a deadline of Sunday to respond. Otherwise, Zwanziger said, Inverness would take its case directly to shareholders.

In a statement yesterday, Beckman Coulter said it still intends to buy Biosite within 30 days. Chief executive Scott Garrett derided the Inverness offer as "highly speculative" and said his deal offers more certainty to investors.

The tactics echo the bidding war between Boston Scientific and Johnson & Johnson, in which the smaller Natick company tried for weeks to derail a signed agreement between Guidant and Johnson & Johnson. Boston Scientific's bid offered Guidant shareholders more money, but less certainty that the deal would close. Boston Scientific eventually won over Guidant's board with a dramatically higher offer, but has been struggling since then as a series of regulatory and sales problems have made it more difficult for the medical-device maker to meet its income projections.

Stephen Heuser can be reached at sheuser@globe.com.