Bloomberg News

Life Technologies Gains on Buyout Speculation

January 18, 2013

Life Technologies Corp. (LIFE:US), a maker of DNA-sequencing equipment and laboratory materials, rose to its highest-ever value after the hiring of strategic advisers sparked speculation the company may be sold.

Life Technologies jumped 11 percent to $60.79 at 4 p.m. New York time, its highest price since the shares began trading in February 1999. The move was the biggest since April 2009. The Carlsbad, California-based company has increased 29 percent in the past 12 months.

Deutsche Bank AG and Moelis & Co. were retained “to assist in its annual strategic review,” Life said in a statement today. The Financial Post reported the hiring late yesterday, saying the advisers have approached at least four private-equity firms as potential buyers.

“While price talk is apparently in the $65 to $75 range, our initial analysis suggests an LBO transaction valuing Life’s equity in the $50 to $60 range is more realistic in present market conditions,” Jon Wood, an analyst with Jefferies & Co., wrote in a research note today, referring to the potential for a leveraged buyout.

Wood cited the company’s “resilient and predictable revenue profile, highly scalable operating model, and extraordinary capital efficiency” as attractive, while noting “risk appetite to be at present more limited than that observed prior to the 2008/2009 financial crisis.”

Attractive Targets

Gene-sequencing companies such as Life and San Diego-based Illumina Inc. (ILMN:US) are attractive takeover targets because their technology can be used to provide a blueprint of a person’s DNA, information that may eventually be used to diagnose disease, identify the risks of certain conditions or better target medicines. Roche Holding AG (ROG), the world’s biggest maker of cancer drugs, failed last year in a hostile bid for Illumina.

Life began a strategic review last fall and hopes to reach a deal by the middle of February, the newspaper said, citing documents it had seen and people familiar with the process. The approached private equity firms include Blackstone Group LP (BX:US) and KKR & Co. (KKR:US), the newspaper reported.

Roche backed away from a $6.7 billion bid for Illumina last year after investors asked for a higher offer. Roche doesn’t comment on rumors or speculation, Daniel Grotzky, a spokesman for the Basel, Switzerland-based company, said by e-mail in response to a question about Life.

A spokeswoman at Moelis declined to comment and a Deutsche Bank official couldn’t immediately comment.

To contact the reporters on this story: Meg Tirrell in New York at mtirrell@bloomberg.net; Naomi Kresge in Berlin at nkresge@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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Companies Mentioned

  • ILMN
    (Illumina Inc)
    • $179.36 USD
    • 0.28
    • 0.16%
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