Exact Sciences

Cancer diagnostics company Exact Sciences (EXAS - Get Report) will acquire healthcare company Genomic Health (GHDX - Get Report) for about $2.8 billion, the companies said Monday.

Under the terms of the agreement, Exact Sciences will buy Genomic Health for $72 a share in a cash-and-stock transaction valued at $2.8 billion. The transaction, which has been unanimously approved by the boards of both companies, is expected to be completed by the end of the year.

Shares of Exact Sciences were down about 11.6% to $104.25, while Genomic Health was up nearly 1.3% to $69.56 a share.

Upon closing, Exact Sciences shareholders are expected to own about 91% of the combined company, and Genomic Health stockholders are expected to own about 9%.

Exact Sciences focuses predominantly on colorectal cancer detection, while Genomic Health provides a broader array of cancer-focused molecular testing services via its Oncotype DX test for breast cancer, ductal carcinoma in situ, colon cancer and prostate cancer.

The combined entity expects to generate about $1.6 billion in profit and gross profit of about $1.2 billion in 2020. The combination is expected to yield cost synergies of about $25 million within the third year.

"Uniting the best minds and molecular diagnostics capabilities will advance the fight against cancer. Combining industry pioneers Exact Sciences and Genomic Health is a pivotal step toward building the leading cancer diagnostics company in the world," Kevin Conroy, chairman and CEO of Exact Sciences, said in a statement.

Save 76% with our Summer Break Sale. Subscribe to our premium site Real Money and become a smarter investor! Click here today to sign up!