Top 5 Life Science M&A in 2016: Thermo Fisher spent lavishly $5.5 billion to acquire two companies
Release Date:
2025-05-22 19:01
In 2016, the number of mergers and acquisitions in molecular diagnostics and life sciences tools (MDx/omics tools) continued to show an upward trend, marking the second increase in transaction volume after three consecutive years of decline. However, the growth rate was 6%, significantly lower than the 33% growth rate in 2015.
According to statistics from GenomeWeb analysts: a total of 51 transactions occurred in the molecular diagnostics and life sciences tools sector in 2016, higher than the 48 transactions in 2015. However, between 2012 and 2014, the volume of M&A transactions showed a continuous downward trend, decreasing by 23% in 2014 alone.
Compared to 30 transactions in the first half of 2015, 35 M&A transactions were completed in the first half of this year. However, only 16 were completed in the second half of this year, which is even lower than the 18 cases in the second half of 2014.
Several billion-dollar transactions occurred this year: Thermo Fisher acquired FEI for $4.2 billion; Danaher acquired Cepheid for $4.0 billion; Thermo Fisher acquired Affymetrix for $1.3 billion. In addition, Abbott's $5.8 billion acquisition of Alere is still in dispute.
A Dramatic First Half
Several of the highest-value transactions, including Abbott's intended acquisition of Alere, Thermo Fisher's acquisition of Affymetrix, and QIAGEN's acquisition of Exiqon, all took place in the first half of the year and were full of drama.
Abbott made an acquisition offer to Alere in February, but variables quickly emerged as Alere delayed submitting its 10-K report to the U.S. Securities and Exchange Commission. Subsequently, Alere received a subpoena from the U.S. Department of Justice to investigate its transactions in Africa, Asia, and Latin America, which led Abbott to request termination of the acquisition and offer to pay Alere $30-50 million to cancel the deal, but Alere refused.
In April, Abbott also announced its acquisition of St. Jude Medical for $25 billion. As Abbott CEO Miles White refused to commit to completing the Alere acquisition, some analysts were not optimistic about this acquisition by Abbott.
Alere subsequently sued Abbott, but the two companies agreed to mediate their dispute. However, the mediation failed, and Abbott sued Alere earlier this month, claiming it wished to terminate the deal because of a 'material adverse change in Alere's value' after the merger agreement, which was described as an adverse event that would significantly alter Alere's long-term prospects.
Thermo Fisher Scientific also faced challenges during its acquisition of Affymetrix, as Affymetrix received a competing offer from a company called Origin Technologies, founded by former Affymetrix executives. After the first offer was rejected, Origin made a second, higher offer, which Affymetrix ultimately declined after a period of consideration. Origin eventually withdrew, and Thermo Fisher Scientific completed the transaction in March.
At the same time, Qiagen's acquisition of Exiqon was not smooth sailing. Qiagen made an offer to the Danish life science research tools and molecular diagnostics company in March but was forced to amend the transaction terms three times to meet shareholder demands. In May, Exiqon was even forced to inform shareholders that failing to reach a deal would impact its short-term profitability. The transaction was finally completed in June.
During Luminex's acquisition of Nanosphere, the asking price increased from $1.35 to $1.70 per share, and Nanosphere shares ceased trading on the NASDAQ Capital Market after the market close at the end of June 2016.
Unusual Big Buyers
Beyond the drama, major buyers were not fixated on a single acquisition target but were discreetly researching several potential targets.
As early as December 2015, William Blair analyst Amanda Murphy stated that she speculated Thermo Fisher would become a major buyer in 2016.
In her view, with Thermo Fisher's acquisition of Life Tech in 2013, which removed a major buyer from the market, she suspected that Thermo Fisher had digested the Life Tech acquisition and would re-enter the market in 2016.
As expected, Thermo Fisher made three acquisitions this year: Affymetrix, electron microscopy company FEI, and stem cell company MTI-GlobalStem, totaling at least $5.5 billion (the acquisition price of MTI was not disclosed).
Thermo Fisher's 2016 M&A Cases
Meanwhile, Danaher, Myriad Genetics, PerkinElmer, Takara Bio USA, and several other companies each made two acquisitions. LabCorp's $371 million acquisition of Sequenom was one of the large acquisitions this year. Siemens and Illumina each had one acquisition.
In an interview, Janney analyst Paul Knight stated that he felt the pace of acquisitions in 2016 was a bit slow; despite a few large transactions, M&A activity in the diagnostics industry did not reach his expected level.
Canaccord Genuity analyst Marc Massaro, however, did not believe the transaction volume was lower than expected. Instead, he felt that the scale of transactions was relatively large, and if one looked at the cash flow, it would be found to be much higher than before.
What to Expect in 2017?
Analyst Paul Knight also stated that in 2017, the diagnostics industry has significant potential for M&A activity. The slowdown in 2016 is a major trend leading to transactions next year. Among them, Danaher, Siemens, and GE will be more active in the diagnostics industry.
Analyst Marc Massaro stated that Danaher and Thermo Fisher are most likely to initiate M&A, and Roche Diagnostics will continue to play its role as the 'buying hegemon'.
In recent years, life sciences have ignited a fire globally, spreading to various science and technology-related industries, and also to the global capital market for instrument acquisitions. Giants are busy with mergers and integration, while small sequencing or diagnostic companies with core technologies have become 'hot commodities' in the eyes of Wall Street investors.
In August this year, multiple foreign media outlets reported that Thermo Fisher intended to acquire genomics sequencing leader Illumina for $30 billion. As of the time of writing, the widely discussed rumor has not materialized. We await to see if Thermo Fisher will initiate this largest M&A case in the history of life sciences next year!
References:
M&A Deals in MDx/Omics Life Sciences Tools Space Up 6 Percent in 2016
M&A Deals in MDx/Omics Life Sciences Tools Space Up 33 Percent in 2015
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