This article has been updated from a previous version, which incorrectly stated that Bruce Cranna of Leerink Swann covers Biosite. He covers Beckman Coulter.
Biosite this week disclosed that it “currently intends” to accept Inverness Medical Innovations’ bid to acquire it, and plans to terminate an earlier offer made by Beckman Coulter.
In the latest, and what appears to be final, twist of the ongoing battle for Biosite, the company said on April 26 that a binding offer it recently received from Inverness is “superior” to Beckman Coulter’s bid as defined in the existing merger agreement between Beckman Coulter and Biosite.
Inverness’ offer, which would buy all of Biosite’s outstanding stock for $90 per share in cash, is $5 more per share than Beckman’s original bid, which opened on March 24 and runs out on April 27. Inverness currently owns 5 percent of the company’s shares.
Inverness’ bid was accompanied by copies of signed and “further revised” commitment letters from its “proposed” financing sources. The offer is irrevocable and will remain open until 11:59 p.m., Pacific Daylight Time, on May 2, according to Inverness.
Biosite has filed copies of Inverness’ offer and financing commitment with the US Securities and Exchange Committee.
Biosite said it has sent Beckman Coulter a “written notice” of its “current intention to terminate” Beckman’s merger agreement and accept the Inverness Superior Proposal shortly after midnight on May 2.
Beckman Coulter has until that time to make a binding counteroffer that the Biosite Board determines is “at least as favorable.” If Beckman doesn’t counter offer, Biosite “intends to terminate the Beckman Coulter merger agreement and enter into the proposed Inverness merger agreement,” Biosite said in its statement.
The move would require Biosite to pay Beckman a $50 million termination fee. In its offer, Inverness said it would repay Biosite that amount as soon as it signs the deal.
In its response, also released April 26, Beckman Coulter said it will “consider all of its options and determine how to best serve its stockholders.” The company said it is “under no obligation to submit a revised proposal to Biosite or to respond in any fashion to the Biosite notice.”
Inverness CEO Ron Zwanziger said his company is “extremely pleased” at Biosite’s decision.
Showing the Money
In late March, Beckman made an offer to acquire Biosite for $85 per share [See PM 03/29/07]. Less than two weeks later, Inverness made its unsolicited bid of $90 per share [See PM 04/05/07].
Earlier this week, the German Federal Cartel Office approved a bid by Beckman’s original bid to acquire Biosite, while US regulators approved the deal last week.
Also last week, Inverness disclosed that it will finance the acquisition with help from General Electric Capital Corporation and UBS Loan Finance and Securities.
In a revised commitment letter Inverness sent to Biosite, Biosite said that GECC and UBSS would loan Biosite $1.3 billion. GECC will provide 40 percent of the amount and UBSS will drum up the 60-percent balance.
“I would be surprised if there isn’t another offer, either from Beckman or someone else.”
Inverness currently owns around 5 percent of Biosite, or around 799,000 shares, according to Nasdaq. Based on Wednesday’s closing price of $93.15 and the fact that the remaining 95 percent of the company that Inverness wants to buy represents around 15 million shares, Inverness will need to come up with just under $1.4 billion.
According to the revised commitment letter, the financing would include a $1.15 billion loan facility and $150 million revolving facility. These figures would depend on several conditions, including the possibility that other lenders may be brought into the deal.
Bruce Cranna, an analyst who covers Beckman Coulter for Leerink Swann, said he does not “think the situation will be resolved” by April 27. Cranna, who spoke with ProteoMonitor before Biosite disclosed that it intends to accept Inverness’ bid, had said “I would be surprised if there isn’t another offer, either from Beckman or someone else.”
He said he did not believe Beckman would up the ante with a higher bid. He also said he had not heard that a potential third bidder was interested in Biosite, but that “in situations like this, oftentimes there could be a third bidder out there waiting. It would not be the first time that a last minute bid swept in.”
Tony Fong contributed to this report