Beckman Coulter Inc., a maker of laboratory equipment, is exploring a sale after it was approached by buyout firms interested in taking the company private, said people with direct knowledge of the matter.
Beckman, with a market value of about $4 billion before today, hired Goldman Sachs Group Inc. to study whether to go private or search for a strategic buyer, said the people, who asked not to be named because the talks are private. Blackstone Group LP and Apollo Global Management LLC are among the firms that approached Beckman, said two of the people. The process is in early stages, and any deal for the Brea, California-based company would likely be months away, the people said.
General Electric Co., Danaher Corp. and 3M Co. are among industrial companies that have recently told financial advisers they are interested in acquiring makers of lab equipment or scientific instruments used in labs, said one of the people.
Beckman said in September that Chief Executive Officer Scott Garrett had resigned and appointed J. Robert Hurley as interim president and CEO while it searches for a successor. Beckman would likely seek at least $90 a share in a buyout, and might command as much as $160 a share, said Dan Leonard, an analyst with Leerink Swann & Co. in New York.
“Beckman Coulter should attract interest from both strategic and financial buyers,” Leonard said in a research report today. “Beckman’s diagnostic lab testing platforms stick well to customers and drive significant consumable revenues.”
Beckman jumped 26 percent, or $14.99, to $72.08 at 4 p.m. in New York Stock Exchange composite trading. The stock, down 13 percent this year before today, rebounded from a low of $44.58 on Sept. 7, the day Garrett’s resignation was disclosed.
Spokeswomen for Beckman and Goldman declined to comment, as did spokeswomen for Fairfield, Connecticut-based GE and 3M, based in St. Paul, Minnesota. A spokesman for Washington-based Danaher didn’t respond to messages.
Charles Zehren, a spokesman for Apollo, and Peter Rose of Blackstone also declined comment. There have been 104 acquisitions in the medical diagnostic equipment business in the past five years with an average disclosed price of $466 million and an average premium of 51 percent, according to data compiled by Bloomberg.
Buyers paid an average of 18.1 times earnings before interest, taxes, depreciation and amortization in the diagnostic-equipment industry deals. Beckman had ebitda of $205.9 million in the third quarter, according to data compiled by Bloomberg.
“We think there is low odds that 3M will seriously look at this, but we believe GE and Danaher will,” said Jeffrey Sprague, co-founder of Vertical Research Partners in Stamford, Connecticut, saying Danaher was the most likely to make an offer. “With a $6 billion enterprise value, Beckman Coulter is probably a bit bigger than either would care to do right now, but it is a manageable size for either.”
GE, which has been building its health-care business, in October agreed to buy cancer diagnostics company Clarient Inc. in a deal valued at about $580 million. Danaher said in September it would acquire Keithley Instruments Inc., a maker of equipment for engineers at electronics manufacturers and academic institutions, for about $300 million.
In July, Beckman received a warning letter from U.S. regulators saying the company marketed a test for heart problems without proper clearance.
The warning letter from the Food and Drug Administration involved a test called AccuTnI, which measures a protein called tropinin that is a marker for heart problems. The FDA letter said the company had made “significant modifications” to the product without getting the required regulatory clearance.
“Beckman’s product quality issues are clearly hindering new sales and customer retention,” Bruce Cranna, an analyst at Jefferies & Co. in Boston, said in an Oct. 27 note to investors.
While Beckman remains a “substantial player” in the laboratory business, “we have concerns about the macro backdrop and management’s ability to blunt the impact of troponin missteps and prevent the fire from spreading to allied clinical segments,” Cranna said in the note.
Given the company’s “recent operational troubles,” a buyout may be possible at $60 a share to $70 a share, said Amit Hazan, an analyst with Gleacher & Co. in New York, in a note to clients today.
Beckman’s biggest business is making laboratory equipment used in scientific research and in hospitals. The company had revenue of $3.3 billion in 2009. The company had $285 million in cash and cash equivalents as of Sept. 10.
Beckman has more than 275,000 laboratory systems installed in about 160 countries, Paul Glyer, a company senior vice president, said at a Piper Jaffray Cos. health-care conference on Dec. 1.