Also on Monday, Roche said it closed a deal to sell its vitamins and fine chemicals
division to Dutch chemicals company DSM NV for Û1.95 billion ($2.09 billion). The
price was less than the Û2.25 billion announced last September, Roche said,
because of the weakening of the U.S. dollar and the slowdown in the world's
economy. DSM paid Û1.85 billion in cash and DSM shares worth about Û100 million.

For Disetronic, Basel-based Roche will offer SFr670 in cash plus two Roche nonvoting
shares for every Disetronic share. The offer is about 55% higher than Disetronic's
closing share price Friday. The companies hope to complete the transaction, which
requires the approval of at least 80% of Disetronic shareholders, by the end of June.

Already the world leader in diabetes monitoring systems, Roche is looking to Disetronic
to reach the growing number of patients turning to pumps to continuously administer
insulin doses without the hassle of blood tests and injections. Disetronic is the world's
second-largest maker of insulin pumps and related accessories after Minneapolis-based
Medtronic Inc. The SFr700 million market has an 11% average annual growth rate.

"From a strategic point of view it seems a desirable objective to prevent other technologies
from making yours redundant," said Stewart Adkins, a London-based analyst at Lehman
Brothers Inc. who has an overweight rating on Roche. It's a lot easier for Roche to purchase
new technologies through acquisitions instead of developing them on its own, he said.

Dorothea Koeppe, an analyst at Switzerland's Bank Lombard Odier who has a hold rating
on Roche, noted that while the offer price isn't cheap, it appears be fair.

By combining the businesses, the companies are seeking to develop a more-integrated
approach to diagnosing, treating and monitoring diabetes, a metabolic disorder in which the
pancreas produces too little or no insulin. About 150 million people worldwide suffer from
diabetes, a figure the World Health Organization expects to roughly double by 2025. The
disease can lead to a number of serious conditions including hypertension, kidney disease,
heart attack and stroke. These complications can be prevented or significantly reduced
by regular blood-sugar monitoring and professional care.

Roche Diabetes Care is already the world leader in blood-glucose monitoring systems, with
SFr2.3 billion in 2001 sales from a line of diabetes tests including the Accu-Check line of
glucose meters and test strips. In a statement, Roche chairman and chief executive Franz B.
Humer said the deal fits in with Roche's strategy of pursuing "a course of steady growth,
with a focus on high potential therapeutic areas."

For Burgdorf-based Disetronic, hooking up with Roche represents its best chance of
surpassing Medtronic, especially in the race to develop the first artificial pancreas to
constantly release insulin to the body when needed. Disetronic, which already has 70% of the
non-U.S. market, also hopes that Roche's 600-strong U.S. sales force will help it win market
share in that country. Besides Medtronic, which presides over 80% of the U.S. market,
Disetronic's other large rival is France-based Aventis SA, best known for its Lantus
long-lasting insulin.

Disetronic had third-quarter sales of SFr82.7 million, up 12.3% over the previous year,
thanks in large part to the successful market launch of a new type of infusion system with
prefilled insulin cartridges.

Roche will not acquire the smaller of Disetronic's two divisions, Disetronic Injection
Systems AG, which had sales of SFr62 million in the first nine months through December.
That will be sold to Willy Michel, who founded Disetronic in the early 1980s with his brother
Peter, for about SFr425 million.

In a conference call with analysts Monday, Willy Michel, who held 33.5% of Disetronic as of
March 31, said the company's size was "not optimal" to compete against multinational
players in the long term. That, he said, explains his decision to sell the larger part of the
business.

Source: The Deal.Com