Origin Technologies has withdrawn its unsolicited nearly $1.6 billion acquisition offer for Affymetrix after that company’s board rejected the bid and recommended against the deal.
Affymetrix’ board said it will instead present Thermo Fisher Scientific’s $1.3 billion acquisition proposal to stockholders for approval at a special meeting set for Thursday.
Origin, an entity created by a group of former Affymetrix executives, surfaced earlier this month with a $1.5 billion proposal. The initial proposal was rebuffed by Affymetrix’s board, which dismissed Origin as a new “shell entity with no assets of which Affymetrix is aware.”
Origin responded by sweetening its original $16.10 per share offer to $17 per share. By contrast, Thermo Fisher offered $14 per share or $1.3 billion for Affymetrix in January.
But in a statement yesterday, Affymetrix’s board declared Origin’s revised offer did not constitute a “superior” proposal that it was obligated to consider, according to terms of its merger agreement with Thermo Fisher.
The board concluded that an acquisition by Origin would prove too risky because:
- It set a $100 million maximum for the reverse termination fee to which Affymetrix would have been entitled if Origin were unable to obtain financing.
- The reverse termination fee would not be payable if a deal with Origin were blocked by the Committee on Foreign Investment in the United States (CFIUS), an interagency panel of the federal government that is authorized to review transactions that could result in control of a U.S. business by a foreign person. An exception would be in circumstances involving Origin’s failure to comply with CFIUS conditions.
- Thermo Fisher signaled it may terminate the deal with Affymetrix
- The termination fee payable to Thermo Fisher under an Origin deal would not be onshore in the U.S. for at least several weeks; according to Affymetrix, Origin’s financing was subject to obtaining regulatory approvals in China
Origin’s proposal was backed by SummitView Capital, an investment firm headquartered in China, with managing directors rooted in the U.S. Origin's offer sparked a letter by U.S. Rep. Jackie Speier (D-CA) to Secretary of the Treasury Jacob (Jack) Lew requesting a review of the proposal. Speier said SummitView Capital raised its funds in partnership with the government of China, posing what she said was a potential national security risk.
Origin said it was required to place “hundreds of millions of dollars” in a U.S. escrow account by Monday—a demand it said was “unrealistic” having been conveyed Friday evening.
“We are disappointed that Affymetrix has chosen not to pursue our compelling proposal despite our efforts to work in good faith toward a definitive agreement,” said Origin’s president Wei Zhou, Ph.D., J.D. “We disagree with Affymetrix’ assessment of the perceived risks of our proposal. It is an unfortunate outcome.”