July 6 (Bloomberg) -- Alere Inc., a U.S. maker of medical diagnostic tests, offered to buy Axis-Shield Plc, valuing the Scottish competitor at about 230 million pounds ($369 million). Axis-Shield’s shares surged to the highest level since 2001.
The cash bid is 460 pence a share, a 37 percent premium to Axis-Shield’s closing price of 335 pence yesterday, Waltham, Massachusetts-based Alere said in a statement today. Alere made the preliminary approach on June 7.
Axis-Shield rejected the proposal and declined to enter into talks, Alere said. The unsolicited offer “fundamentally undervalues the company and its future prospects,” Axis-Shield said in a separate statement. Sebastien Jantet, an Investec Plc analyst, agreed the bid is low and said other potential acquirers may approach Axis-Shield.
“Given the current price and Axis’s track record, we think it undervalues the company,” Jantet said in a note to clients today. “With Alere putting Axis into play, other bidders may well emerge including possibly Siemens and Abaxis.”
Axis-Shield may also attract interest from Abbott Laboratories, said Michael Mitchell, an analyst at Seymour Price in London. Julie Simmonds, an analyst at Collins Stewart in London, said Roche Holding AG might look at the company, which may attract as much as 600 pence a share.
“The current approach materially undervalues the business and fails to recognize its future prospects,” Robin West, a fund manager at Aviva Investors, which owns 3.1 percent of Axis-Shield’s stock, said in an e-mailed statement. “We believe their technology would be very valuable to a number of businesses.”
Adelle Infante, a spokeswoman for Abbott Park, Illinois-based Abbott, declined to comment.
Axis-Shield rose 165 pence to close at 500 pence, the highest price since 2001, in London trading. The 49 percent gain was the biggest since shares began trading in 1993. Alere rose 39 cents, or 1 percent, to $37.83 at 4:01 p.m. in New York Stock Exchange composite trading, and has gained 3.4 percent this year.
Alere said it reserved the right to lower the bid if Axis-Shield pays a dividend or makes a distribution to shareholders.
“Alere is keen to work toward a recommended takeover offer for Axis-Shield and would welcome the opportunity to discuss a possible transaction with Axis-Shield in a constructive manner,” said the U.S. company, which changed its name from Inverness Medical Innovations last year.
Jantet, who upgraded his recommendation to “buy” last month, raised his 12-month target for the shares to 530 pence.
Axis-Shield makes tests for blood and other fluids with small, portable analyzers that provide results in about 15 minutes, fitting into Alere’s “point-of-care diagnostics” business, said Jeff Jonas, an analyst with Gabelli & Co. in Rye, New York.
“They’ve always been a highly acquisitive company, and this one looks like it’s right up their alleyway,” Jonas, whose firm holds Alere shares for clients, said in a telephone interview today. “It seems like a natural tuck-in for them.”
There were 1,030 announced acquisitions of medical products and diagnostics companies in the last five years through yesterday, according to Bloomberg data. The average disclosed deal size was $172.4 million, with an average premium of 38 percent, the data show. The largest was Johnson & Johnson’s $21.3 billion purchase of Synthes Inc., announced in April.
Axis-Shield, which has its headquarters in Dundee, Scotland, said yesterday that first-half revenue rose about 10 percent from a year earlier and that the board is confident about the rest of 2011. The company supplies instruments and tests used in doctors’ offices and develops, makes and markets diagnostic test kits for heart disease, diabetes and other illnesses.
Axis-Shield’s lipid panel, which is expected to start being used in Europe this year and in the U.S. next year to detect fats in the blood, “transforms” the company, Jantet said.
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