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Immucor to Be Acquired by TPG Capital for $1.97 Billion

Immucor Inc., the leading maker of tests to screen blood before transfusions, agreed to sell itself to private-equity firm TPG Capital for $1.97 billion.

The offer of $27 a share is 30 percent more than Immucor’s closing price on July 1, the last trading day before the deal was announced, the Norcross, Georgia-based company said in a statement today. Immucor said that under the agreement it may solicit higher bids from other suitors through Aug. 15.

Immucor holds about 55 percent of the $1.2 billion market for blood reagents and equipment that ensure the safety of transfusions, said David Turkaly, a Susquehanna Financial Group analyst in New York. While sales growth has slowed as hospitals demand better prices, the company still offers industry-topping operating margins of 39 percent as well as steady cash flows, he said.

“It’s a great franchise, it’s got awesome margins and it’s a cash machine that has no debt,” Turkaly said today in a telephone interview. “They have the best mousetrap, the best product for typing and screening blood, which is why they have a dominant share of the market.”

Immucor jumped $6.26, or 30 percent, to $26.99 at 4 p.m. in Nasdaq Stock Market composite trading. It was the stock’s biggest one-day advance since December 2001.

Robust Exploration

In a regulatory filing, the company said it expects the sale, unanimously approved by its board of directors, to close in the second half of 2011. No layoffs are planned. The deal was the result of a “long and robust exploration” in which “many options were explored with no transaction,” Immucor said.

“We believe partnering with TPG Capital will facilitate the level of investment necessary to sustain and enhance Immucor’s franchise for many years to come,” the company said.

TPG, which manages about $48 billion in assets, said in a statement that it was attracted by Immucor’s “impressive platform, loyal customer base and a strong leadership position.” Michael Freitag, an Immucor spokesman, and Lisa Baker, a spokeswoman for Fort Worth, Texas-based TPG, declined to comment further.

There have been 2,295 announced or completed acquisitions for health-care products makers in the last five years, according to data compiled by Bloomberg. The companies sold for an average size of $212.6 million and an average premium of 35 percent. The largest deal was Novartis AG’s purchase of Alcon Inc. for $25.85 billion in 2008.

Other Offers

Immucor likely tried to auction itself off before the announcement and has the best deal it can find, said Dan Leonard, a Leerink Swann & Co. analyst in New York, who covers medical diagnostics companies.

The company generated $329 million in revenue in the year ended May 2010 and was expected to bring in $330 million this fiscal year, based on a Bloomberg survey of nine analysts. Its sales and profit growth have slowed due to pricing pressure from clients and a U.S. investigation into alleged price-fixing, Leonard said.

Immucor sold after seeing “they could get a 30 percent premium or they could continue trying to grow a business that hasn’t been growing in the last few quarters,” Leonard said.

The U.S. Justice Department closed a criminal probe into reagent-pricing without filing charges, Immucor and New Brunswick, New Jersey-based Johnson & Johnson, the No. 2 blood-screening company, said in filings in January and November. The Federal Trade Commission is also investigating the allegations. Mitchell Katz, an FTC spokesman, declined to comment in a telephone interview.

Earnings Climb

In April, Immucor said per-share earnings climbed to 32 cents in the three months ended Feb. 28 as revenue from its instruments to screen blood and other products rose 4 percent.

“The amount of blood testing and an aging population is a natural driver for increased blood demand,” Michele Howard, an Immucor spokeswoman, said in an interview. The higher volume of transfusions being done is raising demand for Immucor’s products, she said.

Joshua H. Levine became the company’s chief executive officer last month after Gioacchino de Chirico announced he was stepping down following 18 years with the business. The timing of the leadership change and the sale was coincidental, Howard said.

TXU, Caesars

TPG Capital, created in 1992 and run by David Bonderman and James Coulter, has participated in several of the biggest leveraged buyout deals ever, including the record-setting $43.2 billion takeover of TXU Corp. in 2007. TPG, which houses most of its executives in San Francisco, also is an owner of Caesars Entertainment Corp. and retailer J. Crew Group Inc.

The Immucor deal would be among the firm’s largest since the leveraged buyout boom and subsequent bust, and follows last year’s purchase, with Carlyle Group, of Australian hospital operator Healthscope Ltd. In 2009, TPG bought IMS Health Inc., a provider of market data for drugmakers and analysts, for $5.2 billion.

Goldman, Sachs & Co. acted as financial adviser to Immucor, while King & Spalding LLP provided legal advice. Ropes & Gray LLP were legal advisers to TPG Capital, which received financial advice from Citigroup Inc. and J.P. Morgan Securities LLC.

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