Alere Inc. (ALR), a U.S. maker of medical diagnostic tests, will press ahead with a 230 million-pound ($374 million) hostile takeover bid for Axis-Shield Plc (ASD) after the Scottish company spurned the offer.
The 460-pence-a-share cash offer is 37 percent higher than Axis-Shield’s closing price of 335 pence on July 5, the day before Alere announced that it had proposed a takeover, the Waltham, Massachusetts-based company said in a statement today. Axis-Shield, based in Dundee, Scotland, repeated today that the offer is too low.
The bid may prompt other prospective bidders to emerge, said Sebastien Jantet, an analyst with Investec Securities. A price of 530 pence a share would be fair, while 550 pence would be a “knockout price,” he wrote in a report to clients today.
“It looks to us like Alere is trying to take advantage of the current market turbulence to get Axis on the cheap,” said Jantet, who recommends buying Axis-Shield shares. “We remain of the view that Alere is a serious acquirer, but think investors should hold fire until we hear what Axis has to say and we see if today’s offer flushes out any further interest.”
Axis-Shield rose 8 pence, or 1.8 percent, to 458 pence at the 4:30 p.m. close of London trading. The stock has risen 68 percent in the past year. Alere fell $1.34, or 5 percent, to $25.28 in New York Stock Exchange composite trading.
Alere made a preliminary approach to Axis-Shield on June 7, the U.S. company said last month. Axis-Shield rejected the proposal and declined to enter into talks, Alere said then. Axis-Shield’s stock jumped above the 460-pence offer price when the offer was announced July 6, as investors anticipated a higher bid, and stayed there until this week, when stock markets plummeted.
“The all-cash offer is highly attractive for Axis-Shield shareholders, representing a compelling value proposition,” Alere said in today’s statement. Jefferies & Co. is advising Alere, which plans to pay for the purchase with its existing cash, the company said.
Axis-Shield supplies instruments and tests used in doctors’ offices, and makes diagnostic kits for heart disease, diabetes and other illnesses.
“The offer fundamentally undervalues the company and its future prospects,” Axis-Shield said in a statement. “The board has full confidence in the company’s strategy and management to continue to deliver significant shareholder value.” The company said it will make a further announcement “in due course.”
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