Danaher Buys Cepheid For $4bn, Citing Molecular Diagnostics Strength
Danaher is paying a 54% premium to acquire Cepheid, maker of the fully automated GeneXpert rapid genetic testing system. Cepheid will join Danaher's $5bn Diagnostics segment, which already includes Beckman Coulter, Leica Biosystems and Radiometer. Danaher executives cited Cepheid's large installed base and potential for growth and efficiency improvements as justifications for the deal. At least one analyst believes Danaher may be paying too much.
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The last month of 2016 saw a final flurry of medtech M&A activity as companies rushed to seal deals before the New Year arrived. Medtech Insight's M&A data tracker recorded twice as many deals in December compared to the previous month, but that was not enough to boost the year's tally, which fell behind 2015.
Q3 medtech financing doubled in dollar volume to $3 billion, with debt offerings again representing the majority of the aggregate; acquisitions totaled $5.3 billion, mainly due to Johnson & Johnson’s $4.3 billion buy of Abbott Medical Optics. Diagnostics financings, which brought in $85 million, continued to decline, but at $5 billion, acquisitions showed a slight increase over the previous quarter, with Danaher’s takeover of Cepheid accounting for most of the M&A volume.
Roche's diabetes business continues to struggle as third quarter results show sales in the division dipped by 3%, while Quest Diagnostics' bottom line took a hit from special charges. Meanwhile, bioMérieux said third-quarter revenues increased by 7%; Danaher is finalizing its acquisition of Cepheid.