Life Technologies Corp. (LIFE:US), a maker of DNA-sequencing equipment and laboratory materials, is in discussions with private-equity firms and health-care companies about a potential sale of the company, according to people familiar with the process.
Blackstone Group LP (BX:US) and KKR & Co. (KKR:US) are among four private- equity firms weighing bids, said two people, who asked not to be named because the discussions are confidential. Health-care companies also have expressed interest in a takeover and potential suitors have until late January to submit offers, the people said. Life said yesterday it had hired Deutsche Bank AG and Moelis & Co. to assist in a strategic review of the company.
The Carlsbad, California-based company has a current market value of about $10.5 billion, after shares rose yesterday to their highest-ever price based on takeover speculation. Life may sell for about $13 billion, with a buyout fund writing an equity check of $4 billion to $5 billion for the deal, one of the people said.
Life’s “valuation has been relatively depressed,” Ross Muken, an analyst with ISI Group, said in a telephone interview. “They’ve had an ongoing battle in terms of messaging, positioning and capital deployment.”
Life’s shares rose 11 percent to $60.79 at the close yesterday in New York, the biggest single-day gain in almost four years and the highest value since shares started trading publicly in February 1999.
The company’s board retained Deutsche Bank and Moelis “to assist in its annual strategic review,” Life said in a statement. “The board of directors has not decided on any specific course of action.”
The company’s statement implies Life has “potentially received an offer from an acquirer, is contemplating a LBO or is potentially in the process of shopping the company for a strategic buyer,” William Quirk, an analyst with Piper Jaffray & Co., wrote in a research note. He cited Roche (ROG) Holding AG, Thermo Fisher Scientific Inc. and General Electric Co. (GE:US) as potential strategic buyers.
Gene-sequencing companies such as Life and San Diego-based Illumina 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, the world’s biggest maker of cancer drugs, failed last year in a hostile bid for Illumina. Life is more diversified than Illumina, with “slow-growth research consumables” dominating its portfolio, said Quirk. For that reason, “we believe an acquirer interested in the faster- growing next-gen sequencing business has better options.”
ISI Group’s Muken put the possibility of a leveraged buyout at 10 percent, pegging the price at $55 to $65 a share. He said a sale to a strategic buyer, such as a large pharmaceutical firm or equipment company like Danaher Corp. (DHR:US), may have a 40 percent chance of occurring, at $60 to $70 a share.
Roche backed away from its $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.
Seth Martin, a spokesman for GE, said the company doesn’t comment on rumors or speculation. Ron O’Brien, for Thermo Fisher, declined to comment. Matt McGrew, chief of investor relations for Danaher, couldn’t be reached for comment.
A spokeswoman at Moelis and a Deutsche Bank official declined to comment.
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