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Affymetrix Board Agrees to Discuss $1.85B Acquisition Bid With Origin Technologies

NEW YORK (GenomeWeb) – Affymetrix said today that its board now plans to engage in discussions with Origin Technologies regarding its most recent proposal to acquire Affy for $17.00 per share in an all-cash transaction.

However, Affy's board of directors said it continues to recommend that its stockholders vote in favor of the adoption of a previously approved merger with Thermo Fisher Scientific, in which Thermo Fisher would acquire Affy for $14 per share, or approximately $1.3 billion.

"There can be no assurance as to the outcome of any discussions with Origin," the company said in a statement."

Origin, founded by former Affy executives for the purpose of acquiring the company, made its latest bid on Wednesday following a rejection by Affy's board of an earlier proposal for a $1.5 billion, or $16.10 per share, deal last week.

Rejecting the initial bid, Affy's board of directors raised questions about the financing Origin had secured from Chinese private equity firm SummitView Capital, among other caveats, concluding that the proposal was not superior to Affy's Jan. 8 merger agreement with Thermo Fisher.

In response, Origin upped its bid to $1.85 billion, or $17.00 per share, including a $100 million reverse termination fee.

Saying that this new bid "could lead to a superior proposal," Affy's board yesterday said in order to honor its fiduciary duty to shareholders it was postponing until March 31 a special stockholder meeting that was to take place tomorrow, during which the firm's shareholders were to vote on the Thermo Fisher bid.

Now the company has said it has informed Origin that it will engage in discussions regarding its newest proposal, and has said that its evaluation will focus on several key deliverables — namely Origin's ability to draft a merger agreement and other transaction documents containing the specific terms of its proposal, and to provide details of its plans to obtain all regulatory approvals that are required or will be sought, including approval from the US Department of Treasury's Committee on Foreign Investment in the United States.

Meanwhile, Affy's board said it continues to recommend that shareholders vote in favor of the adoption of the merger agreement with Thermo Fisher.

There has been no indication that Thermo Fisher plans to raise its own offer.

In a note published this morning, Leerink analyst Dan Leonard said that he and his colleagues do not think Thermo Fisher is likely to up its bid. If Affy were to terminate the deal in favor of Origin Technologies' proposal, Thermo Fisher might be better served in putting its capital to work through share repurchases, which would be "more accretive" to near-term earnings per share.

According to Leonard, while Affymetrix represents a "particularly good fit" for Thermo Fisher, there are also other companies that could be similarly appropriate targets for acquisition.

In Thursday morning trade on the Nasdaq, shares of Affymetrix were up a fraction of 1 percent at $15.12. Likewise, Thermo Fisher's shares on the New York Stock Exchange were up a fraction of a percent at $138.91.