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Shares of Life Technologies Decline on Deal Doubts

NEW YORK (GenomeWeb News) – Shares of Life Technologies fell 7 percent in early Wednesday trade after a report from Reuters that potential acquirers for the firm have cooled on a deal.

Shares of Life Tech had jumped nearly 20 percent in mid-January after reports suggested that the firm was looking for an acquirer. Its shares have since remained about 15 percent higher than the closing price of $54.97 on Jan. 17, the day before the report in Canada's Financial Post.

At the time, Life Tech confirmed that it had hired Deutsche Bank and Moelis & Co. to "assist in its annual strategic review." The firm added, "The board of directors has not decided on any specific course of action," and it declined further comment.

A handful of private equity groups — Blackstone, KKR, TPG Global, and Carlyle investment Management — were cited as having been approached, and the names of potential industry acquirers have included Novartis, Honeywell, Danaher, Thermo Fisher Scientific, and Roche.

According to Reuters, initial offers were made from private equity players that valued Life Tech around where its shares are currently trading, but it is likely offers would need to be increased in order to get approval from the Life Tech board. The news agency said that Thermo Fisher had engaged in discussions but has backed away from a deal, but added that "talks with interested parties are continuing."

"As it relates to private equity, this is not a surprising development, as our LBO math could not lead to a deal price over $65, a very modest premium to current trading levels," ISI Group Senior Managing Director and Partner Ross Muken said in a note today.

"With respect to [Thermo Fisher], we had viewed them as an opportunistic buyer, willing to pursue a transaction in the high-$60s to low-$70s range, with the potential for disposing of the sequencing business (Ion Torrent + CE) a further complication given [Thermo's] lack of historical interest in DNA sequencing," he added. "[O]ur view is that this impasse on price significantly lowers the probability of a sale to a strategic or private equity partner."

Robert W. Baird analyst Jeffrey Elliott said that although a near-term transaction may be less likely, "we can't rule out deal posturing, and talks with interested parties supposedly continue."

Shares of Life Tech were trading at $58.95 on the Nasdaq.

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