Zacks_Analysts' Blog : Gen-Probe Buys GTI Diagnostics - Analyst Blog

California-based diagnostic products maker Gen-Probe Inc (GPRO) has acquired Wisconsin-based privately-held specialty diagnostics firm GTI Diagnostics from equity firm Riverside Company for $53 million in cash. The company has funded the acquisition with its available cash.

GTI Diagnostics specializes in medical diagnostics assays for transplantation, blood bank and coagulation markets. The entity was incorporated in 1985 as a subsidiary of the Blood Research Institute (“BRI”), which is affiliated to BloodCenter (a community-based blood bank) of Wisconsin. BRI divested its interest in GTI to Cleveland-based Riverside Company in July 2008.

GTI develops and makes human leukocyte antigen (“HLA”) antibody screening products marketed by Gen-Probe under the “Lifecodes” moniker. It also markets a number of HLA-related testing products. Additionally, GTI offers immunoassay products for the specialty coagulation and blood bank markets. 

HLA testing (or typing) detects antigens (genetic markers) on white blood cells and is used to provide evidence of tissue compatibility for organ transplantation. HLA test and antibody screening are vital in matching organ donors and organ recipients, thereby minimizing transplant rejection.

The acquisition is a strategic fit for Gen-Probe, enabling it to expand its transplant diagnostics business and enhance access to growing transplantation, blood bank and specialty coagulation markets. The company expects to record non-recurring acquisition-related charges and envisions the deal to be modestly accretive to its adjusted earnings per share in 2011.

Gen-Probe has been a pioneer in the commercial and scientific development of nucleic acid testing (“NAT”) for the diagnosis of infectious diseases. It is a market leader in domestic gonorrhea and chlamydia testing with its PACE and APTIMA assay product lines.

Gen-Probe is a leading pure-play molecular diagnostics company. The company’s molecular diagnostic tests and instruments are designed to improve results and increase laboratory operating efficiency. Gen-Probe competes with more established firms in the molecular diagnostic industry such as Roche (RHHBY), Becton Dickinson (BDX) and Abbott Labs (ABT).

Gen-Probe is positioned to benefit from the ongoing market shift away from traditional diagnostic methods (such as antibody-based assays) toward molecular testing, which offers greater precision and sensitivity in detecting biological events. Currently, we are Neutral on Gen-Probe.