Strategic rationale and economics of combination support increased price of $90 per Biosite share.
Beckman Coulter has rivaled Inverness Medical Innovations’ acquisition price for Biosite. The company raised its bid from $85 to $90 per share, matching Inverness Medical’s proposal. The latest offer from Beckman Coulter is valued at approximately $1.67 billion.
“Our priority is to create sustainable value for Beckman Coulter’s shareholders,” remarks Scott Garrett, Beckman Coulter’s president and CEO. “The compelling strategic rationale and economics of this transaction should enable us to achieve this objective at the revised price.”
On April 26, a month after Beckman Coulter made its initial tender offer, Biosite reported that its board of directors found Inverness Medical’s $90 per share proposal made on April 5 superior. Beckman Coulter thus raised its bid and believes that “the price in this transaction is both full and fair to Biosite shareholders, while also creating considerable value for Beckman Coulter’s shareholders,” according to Garrett.
Beckman Coulter, however, hasn’t been able to go above its $67.08 closing price the day before its initial acquisition offer. It opened today at $62.5. While its initial offer represented a 53% premium over Biosite’s shares at the time, the company is now valued at around $92.83.
With this revised merger deal, Beckman Coulter will extend its tender offer for all of Biosite’s outstanding common stock until midnight, EDT, Tuesday, May 15. It is no longer obligated to extend the amended proposal beyond this date although it retains the right to do so.
Beckman Coulter states that all necessary regulatory clearances associated with this transaction have been received. It reports that at closing, substantially all outstanding Biosite stock options will be cashed out rather than being rolled over into its own stock options. As of 5 p.m., EDT, on May 1, 2007, approximately 70,000 shares had been tendered and not withdrawn, according to the company.
“At the revised price,” Garrett notes, “we expect the transaction will immediately accelerate Beckman Coulter’s revenue growth, improve its operating margins, and, based on the specifics of the permanent financing and the timing of synergies, the transaction is expected to be essentially neutral or modestly accretive to 2008 GAAP earnings per share.”
He points to the area of immunoassays as being the reason behind this acquisition. “Immunoassay testing is a primary growth driver for Beckman Coulter, and we have been expanding this business at 15% to 20% per year—more than twice the market’s growth rate—for the past several years. This product area is where most new, high-value tests come to market. Our acquisition of Biosite accelerates even further our ability to create value in this highly profitable market segment.
“A major source of value in the transaction is our unmatched ability to leverage our global commercial infrastructure, expertise, and installed base to expand sales of Biosite’s immunoassay tests, including B-type Natriuretic Peptide (BNP),” Garrett continues. “Only Beckman Coulter has an existing deep and successful relationship with Biosite that will allow it to move quickly to begin realizing value from this acquisition. Operationally, we expect to realize significant improvements in the efficiency of Biosite’s current supply chain and customer service channels. Longer term, we will have significant opportunities to leverage Biosite’s pipeline of novel immu