Life Technologies Corp. (LIFE) got takeover offers from a private-equity group including Blackstone Group LP (BX), and from Thermo Fisher Scientific Inc. (TMO), for as much as $11.8 billion, said people familiar with the matter.
The bids came in at $66 to $69 a share, said two of the people, who asked not to be named as the process is private. Life could pick a buyer as soon as next week or decide against a sale, said one of the people.
Thermo Fisher can probably take out $300 million to $400 million in costs and the deal would be immediately accretive, and the company’s shareholders are supportive of a deal, one person said. Ross Muken, an analyst with ISI Group, said Thermo Fisher could pay up to $70 a share and still generate “double- digit” returns within five years.
“There is a large synergy opportunity here,” Muken said in a telephone interview from New York. “There are going to be cost synergies on the sales side and back office and some duplicative R&D and places you can find over investment in the Life business.”
Thermo Fisher is the second-biggest maker of life-sciences equipment by market value. Reuters reported earlier that the Waltham, Massachusetts-based company had bid for Life. Life’s shares rose 0.6 percent to $66.58 at 4 p.m. New York time, while Thermo Fisher’s advanced 3.8 percent to $81.34.
Blackstone Bid Group
Blackstone’s bidding group consists of Carlyle Group LP (CG), KKR & Co. and Singapore’s Temasek Holdings Pte., the people said. KKR joined New York-based Blackstone after fellow private- equity firm TPG Capital dropped out of the consortium last month, people familiar with the matter have said.
Club deals, in which three or more investment firms band together to purchase companies, became rare after the financial crisis put an end to leveraged buyouts of $10 billion or more. They have re-emerged as the financing markets have revived and deals’ sizes have increased.
In 2011, KKR partnered with two other private-equity firms and Japanese trading house Itochu Corp. in a $7.2 billion buyout of oil-and-gas explorer Samson Investment Co. Last year, Apollo Global Management LLC led a three-member club that paid $7.15 billion for El Paso Corp.’s exploration and production unit.
A spokeswoman at KKR declined to comment. Representatives at Thermo Fisher, Blackstone and Life didn’t immediately return calls seeking comment, nor did officials at Carlyle.
The Business of Life
Life, whose market value exceeds $11 billion, has been reviewing its options for at least three months. The Carlsbad, California-based company’s products 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.
Life said in January that it was working with Deutsche Bank AG, as well as Moelis & Co., on the strategic review. Danaher Corp. (DHR) also explored a purchase of Life, people familiar with the matter have said. The company is unlikely to have bid, said one of these people. A representative at Danaher didn’t immediately return a call seeking comment.
Another medical-technology company, Agilent Technologies Inc. (A), was interested in Life’s next-generation sequencing business, said a person familiar with the matter. Agilent didn’t make an offer for the unit, although it remains interested should Life opt not to sell the whole company, the person said. Amy Flores, a spokeswoman at Santa Clara, California-based Agilent, didn’t immediately return a phone call or e-mail seeking comment.
The market for gene tests, like the ones sold by Life and rival Illumina Inc. (ILMN), may grow 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.
Life makes machines that can provide a full transcript of a person’s DNA. That information may be used by doctors to diagnose rare diseases, identify patients at increased risk for a genetic condition, such as Parkinson’s disease, or match cancer treatments to patients’ tumors. The potential of the technology drove Roche Holding AG (ROG) to make a $6.7 billion hostile takeover bid for Illumina last year, which was ultimately unsuccessful.
Life has boosted sales by just 5.1 percent on average in each of the last three years versus a 20 percent increase at San Diego-based Illumina, data compiled by Bloomberg show. Life also sells products that scientists use in labs for cancer and stem- cell research.
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