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Affymetrix Board Rebuffs Origin's Second Offer, Reaffirms Support for Thermo Fisher Merger

NEW YORK (GenomeWeb) – Affymetrix's board of directors today dismissed the most recent bid by Origin Technologies to acquire Affy for $17.00 per share in an all-cash transaction, reaffirming its support for a previously approved merger agreement with Thermo Fisher Scientific at $14 per share.

Founded by former Affy executives, Origin made its second bid last Wednesday following the rejection by Affy's board of its initial proposal for a $16.10 per share deal.

While Affy refused to consider Origin's first bid, it deemed the increased proposal promising enough to merit discussion. In order to honor its fiduciary duty to shareholders, Affy said last week that it was postponing until March 31 a meeting that was to take place last Friday in which shareholders were to vote on the Thermo Fisher deal.

Now, saying it has devoted "extensive time and resources to engaging with Origin," Affy has once more rejected the company's offer in favor of its existing merger agreement with Thermo Fisher.

Despite the fact that Origin's latest offer represents a $3.00 per share premium over Thermo Fisher's bid, the Affy board said that it has determined that the risks to initiating and consummating a potential transaction with Origin outweigh the potential benefit of the higher per-share price.

According to Affy, it completed discussions with Origin and its advisors that included providing due diligence information to Origin, negotiating the terms of a proposed merger agreement, and engaging in its own reverse due diligence on Origin and its financing sources.

Affy said in a statement that Origin has provided for a reverse termination fee of $100 million, representing the maximum amount of recovery available to Affymetrix if Origin were unable to obtain financing. However, the reverse termination fee would not be payable if a transaction with Origin were blocked by the Committee on Foreign Investment in the United States.

Affy also said that its board has determined that the $100 million reverse termination fee is inadequate when weighed against the material risk of Affymetrix stockholders losing the premium present in the approximately $1.5 billion equity value of the Thermo Fisher merger.

Based on these and other risk calculations, the company said it has concluded that the Origin offer does not constitute a superior proposal, and thus it continues to recommend that shareholders vote in favor of the merger with Thermo Fisher at the firm's upcoming meeting on March 31.

"The value, certainty, and timing offered by our existing agreement with Thermo Fisher … outweighs the putatively higher premium but significantly greater uncertainties associated with a potential transaction with Origin. We look forward to putting the matter before our stockholders and proceeding," Affymetrix President and CEO Frank Witney said in a statement.

In late Monday trade on the Nasdaq, shares of Affy were down nearly 6 percent at $14.09.

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