Thermo Fisher Scientific Inc., the second-biggest maker of life-sciences equipment by market value, agreed to buy Life Technologies Corp. for $13.6 billion in cash in a deal that expands its reach in medical testing.
The $76-a-share offer also includes the assumption of $2.2 billion in debt, Waltham, Massachusetts-based Thermo Fisher said in a statement today. With the debt, the deal is valued at about $15.8 billion. The per-share offer is 12 percent more than Life Technologies (LIFE:US)’ closing price of $68 on April 12.
Life, based in Carlsbad, California, makes laboratory equipment that helps to map DNA, information used to diagnose disease, identify risks of certain conditions or better target medicines. The market for gene tests may expand to $25 billion from $5 billion within a decade as more doctors use a patient’s genetic makeup to tailor treatments, according to a report last year from UnitedHealth Group Inc. (UNH:US)
The purchase gives Thermo “reach across all the major technologies,” said Ross Muken, an analyst at International Strategy & Investment Group LLC in New York. “You now have a unique customer touch and a portfolio others will be unable to match.”
While the price was “a little higher” than some investors had expected, “we still think ultimately people will view this as a positive,” he said in a telephone interview.
Thermo Fisher declined 1.2 percent to $78.61 at the close in New York. Life Technologies gained 7.5 percent to $73.11.
Acquirers have announced or completed 1,941 deals for biotechnology or genetic technology companies over the past five years, with an average size of $145.2 million and a typical premium of 53 percent, according to data compiled by Bloomberg. The largest deal was Roche Holding AG’s $44.05 billion purchase in 2009 of the portion of drugmaker Genentech Inc. it didn’t already own.
The potential of the gene-mapping technology drove Roche to make a $6.7 billion hostile takeover bid for Illumina Inc. (ILMN:US) last year, which was ultimately unsuccessful.
Sales for Life have increased by about 5 percent on average in each of the past three years, compared with a 20 percent gain at San Diego-based Illumina Inc., data compiled by Bloomberg show. Life reported revenue of $3.8 billion last year.
Life has been “a technology loser,” falling behind rivals in terms of DNA sequencing, said ISI’s Muken. Still, with private-equity and corporate bidders vying for the company, it was able to secure a “fair value, given its growth profile.”
Life had been reviewing its options for at least three months and said in January that it was working with Deutsche Bank AG, as well as Moelis & Co., on the strategic review. Cravath, Swaine & Moore LLP acted as legal advisers.
JPMorgan Chase & Co. and Barclays Plc acted as financial advisers to Thermo Fisher, while Wachtell, Lipton, Rosen & Katz and WilmerHale LLP acted as legal advisers.
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