Back in June, Abcam’s CEO Alan Hirzel and his predecessor, founder Jonathan Milner, PhD, resolved a bitter battle over the company’s direction by agreeing to explore strategic alternatives. One of those alternatives was a potential sale of the company, dubbed the “Amazon of antibodies” because of its selection of over 110,000 products to research protein targets, from antibodies to proteins, lysates, biochemicals, kits, and assays—enough, it says, to supply two-thirds of the world’s life scientists.
Today Abcam announced that potential sale, saying that it agreed to be acquired by Danaher for approximately $5.7 billion, including assumed indebtedness and net of acquired cash.
Danaher beat out more than 20 would-be buyers that emerged from more than 30 potential counterparties that engaged with Abcam during its strategic review. The would-be buyers included Agilent Technologies, which along with Danaher emerged as leading potential purchasers for the company in June, according to Bloomberg News. By Friday, Reuters reported, Danaher had become the lead potential buyer for Abcam.
Headquartered in Cambridge, U.K., Abcam offers technologies used by approximately 750,000 researchers. Milner founded Abcam in 1998, oversaw its going public in 2005, and served as CEO through 2014, when he was succeeded by Hirzel, then the company’s chief marketing officer.
Under Hirzel, Abcam has carried out “Abcam 2.0,” which has pivoted the company from a seller of third-party antibodies to a developer of “innovative, differentiated, and high-quality” in-house products that deliver higher margins—such as proteomic research reagents, immunoassays, cellular and biochemical assays, and cytokines.
But after Abcam’s shares plunged by nearly half (47%) between January 3, 2022, when shares closed at $23.89, and May 9, when the price stood at $12.69, Milner—who served as deputy chairman before leaving the board in 2020 and owns 6.1% of Abcam’s shares—began pressing for changes to Abcam’s board and direction through a proxy challenge, in hopes of boosting its share price.
The proxy campaign and decision to launch a strategic review touched off a 13% jump in Abcam’s American Depositary Shares traded on Nasdaq, from $20.28 to $22.97, a level at which shares have since plateaued.
Dismay over deal price
Today’s news of the Danaher acquisition deal did not lift Abcam shares as is customary when a company is being acquired. Instead, Abcam shares fell 3% in early trading from $23.36 to $22.62 as of 11:45 a.m. ET, with Abcam investors apparently dissatisfied with the deal struck by the companies.
Abcam chairman Peter Allen defended the Danaher deal and the strategic review process from which it emerged, in which Lazard and Morgan Stanley served as financial advisors while Latham & Watkins served as legal advisor.
“Following a rigorous process, I’m confident this combination with Danaher maximizes value for shareholders while delivering an excellent outcome for our employees and customers,” Allen stated.
Danaher shares rose 2% as of 11:45 a.m., to $260.09 from Friday’s close of $355.53.
Danaher in July lowered its annual sales growth forecast for a second straight quarter, saying that it expected adjusted sales in core operations (excluding COVID-19-related business) to rise in low single digits for the full year, rather than mid-single-digit growth as previously forecasted. Danaher also projected core revenue growth in bioprocessing will be down ~10% for the full year, as earlier-stage companies cut back on equipment purchases due to rising interest rates and investors gravitate to drug developers with candidates already in clinical phases.
At $24 a share cash, the deal price marks a 39% premium from $17.23 a share on May 16, the day before Milner signaled the start of his proxy campaign by announcing he would move to call for an extraordinary general meeting. Milner asked Abcam shareholders to return him to the board and appoint him as executive chairman—one of five proposals he made to shareholders for a vote during the meeting, which had been scheduled for July 12.
Another proposal would have removed Allen as chairman, as well as CFO Michael S. Baldock, and Sally Crawford, a former COO of Healthsource who chairs the board’s Remuneration Committee and is a member of its Audit Committee.
Milner accused Allen of “fail(ing) to hold executives to account for their disproportionate remuneration demands and performance metrics machinations, and overseen poor governance, poor execution, and poor cost controls.” Baldock was faulted for £109 million ($137 million) in impairments and adjustments in FY 2022; material weaknesses in maintaining inadequate or ineffective controls within the inventory cycle, revenue, and accounts receivable and IT general controls; as well as “massive” overspending. Crawford was blamed for Hirzel’s 216% increase in remuneration since 2019 as well as allowing management to “move the goalposts” by altering compensation performance metrics over time, and keeping inconsistent reporting metrics over time.
Joining Life Sciences segment
Abcam is expected to operate as a standalone operating company and brand within Danaher’s Life Sciences segment, where Danaher said it will help it carry out one of its life-sci strategies of helping map complex diseases and accelerating drug discovery.
According to Danaher, its Life Sciences segment offers a broad range of instruments and consumables that are primarily used by customers to study DNA, RNA, nucleic acid, proteins, metabolites and cells, in order to understand the causes of disease, identify new therapies, and test and manufacture new drugs, vaccines and gene editing technologies. The segment also provides products and consumables used to filter and remove contaminants from a variety of liquids and gases in many end-market applications.
Life Sciences is separate from Danaher’s “Biotechnology” segment, which was formed last year. Biotechnology includes the company’s bioprocessing and discovery and medical businesses and offers a variety of tools, consumables and services primarily used for advancing and accelerating the research, development, manufacture and delivery of biological medicines. The segment includes the Pall life sciences business, which Danaher acquired for $13.8 billion in 2015, and Cytiva, re-launched in 2020 after Danaher spent $21.4 billion for the former BioPharma business of GE Healthcare Life Sciences.
Headquartered in Washington, DC, Danaher had approximately 81,000 staffers or “associates” as of December 31, 2022, according to its most recent Form 10-K annual report filed in February and covering last year. Danaher’s associates work within a global family of more than 20 operating companies focused on biotech and life sciences, as well as diagnostics, water quality, and product identification.
“Abcam’s long track record of innovation, outstanding product quality and breadth of antibody portfolio positions them as a key partner for the scientific community,” Rainer M. Blair, Danaher’s president and CEO, said in a statement. “We look forward to welcoming Abcam’s innovative and talented team to Danaher as we continue to help our customers solve some of the world’s biggest healthcare challenges.”
The boards of both Abcam and Danaher have unanimously approved the acquisition deal, which is anticipated to close mid-2024. The deal is subject to customary conditions that include receipt of applicable regulatory approvals, the sanction of the High Court of Justice of England and Wales, and Abcam shareholder approval.
Since the mid-1980s, Danaher has carried out an ongoing company-wide Kaizen or continuous improvement effort based on lean manufacturing and anchored on a common culture and operating system, called the Danaher Business System, focused on people, plans, processes, and performance.
“Danaher shares our passion to help life science researchers achieve their mission faster and their operating company model allows us to continue to pursue our strategy, while harnessing the power of the Danaher Business System to ensure we remain the partner of choice for our customers,” Hirzel added.
