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Hologic, an established provider of diagnostic products and therapeutic devices, will acquire Third Wave Technologies in a $580 million deal.

Third Wave develops molecular diagnostic reagents for a wide variety of DNA and RNA analysis applications. The company’s offerings include a range of diagnostic products for conditions such as Cystic Fibrosis, Hepatitis C, cardiovascular risk and other diseases. The company had revenues of $31 million in 2007.

Particularly promising are Third Wave’s HPV diagnostics. Third Wave uses a patented molecular diagnostic platform designed to help identify cervical cancer at an early stage. In April, the company submitted pre-market approval applications to the FDA; the submissions were based on a successfully completed clinical trial. Hologic anticipates FDA approval in the first half of 2009.

There are currently 10 million HPV tests being performed in the U.S., representing a $200 million market and growth in excess of 40% in each of the past five years. Hologic believes the global market for HPV testing could exceed $800 million in the next few years. If Third Wave’s HPV tests fail to pass the FDA’s muster, Hologic will have certainly overpaid.

“Once FDA approval is obtained, these products, will be a complementary fit with our current suite of products, and broaden our product offerings into high-growth diagnostic markets for women,” commented Jack Cumming, Hologic’s Chairman and CEO.

Hologic has an established women’s health sales and distribution network, as well as extensive relationships with clinical labs and OB/GYN channels.

The transaction is expected to be slightly dilutive to Hologic’s non-GAAP EPS in Fiscal 2008. Hologic expects the transaction to be cash flow neutral in Fiscal 2009 as a result of the use of $160 million in acquired tax NOLs, including interest and financing expense of approximately $40 million from the term loan of approximately $600 million to finance the acquisition.