Danaher Corp. (IW 500/55) agreed to buy molecular diagnostics company Cepheid in a deal valued at about $4 billion, including debt, the first purchase since spinning off its industrial businesses to focus on science and technology.
The offer is $53 a share in cash for all of the outstanding shares of Cepheid, Danaher said in a statement on Tuesday. That values the Sunnyvale, Calif.-based company at a 54% premium to its closing price of $34.42 Friday. U.S. markets were closed on Monday for the Labor Day holiday.
Danaher averaged 10 acquisitions per year in the last decade while widening profit margins, before completing its separation in July. With Cepheid, it is gaining a maker of medical instruments that enable genetic testing for infectious diseases, among others. Cepheid’s shares had dropped 46% since their July 2015 all-time high through Friday, mirroring declines in biotechnology stocks.
Cepheid posted revenue of $539 million last year, and has forecast sales of as much as $635 million this year, Washington-based Danaher said. It expects the acquisition to erode net earnings per share in the first full year after closing.
Danaher’s shares were little changed at $81.07 Tuesday in early trading. Cepheid rose 52% to $52.62.
The transaction is likely to be completed around the end of 2016, according to the statement. Danaher expects to fund the deal with cash and proceeds from the sale of debt.
By Chitra Somayaji