Exclusive: Roche joins Life Tech auction; KKR, H&F team up - sources

NEW YORK Wed Mar 20, 2013 2:11am IST

The logo of the Swiss drugmaker Roche is seen on a factory in Burgdorf near Bern November 17, 2010. REUTERS/Pascal Lauener

The logo of the Swiss drugmaker Roche is seen on a factory in Burgdorf near Bern November 17, 2010.

Credit: Reuters/Pascal Lauener

Related Topics

Stocks

   

NEW YORK (Reuters) - Roche Holding AG and a buyout group comprising KKR & Co LP and Hellman & Friedman LLC have joined the bidding for Life Technologies Corp, a genetic testing company coveted for its advanced diagnostics and steady cash flow, according to people familiar with the matter.

Roche's interest in Life Tech, a biomedical laboratory equipment maker with an $11 billion market value, signals the Swiss drugmaker's continued interest in gene sequencing a year after its $6.8 billion hostile offer for Illumina Inc failed over price.

The potential bidders are joining what is turning out to be a competitive auction, as cheap financing and growing confidence in the U.S. economy prompt more companies and private equity firms to contemplate deals costing more than $10 billion.

Thermo Fisher Scientific Inc, Danaher Corp and a buyout consortium of Blackstone Group LP, Carlyle Group LP, TPG Capital LP and Singapore's state investor, Temasek Holdings, are among the parties weighing bids, Reuters previously reported.

Healthcare companies have been attracted to Life Tech by the scale and synergies that a tie-up could bring while private equity firms have found the Carlsbad, California-based company's reliable cash flow appealing, people familiar with the matter said.

Bids are due in early April, said the people, who asked not to be named because details of the auction are not public.

Life Tech shares, which were down 1 percent before the news, ended up 1 percent at $63.58 on Tuesday. They are up more than 30 percent since the start of the year on hopes that the company's exploration of strategic alternatives will lead to a sale.

Representatives for KKR, Hellman & Friedman and Life Tech declined to comment. Roche said it does not comment on market speculation.

Analysts see a good fit between the laboratory equipment and scientific instrument businesses of Thermo Fisher and Life Technologies, with the exception of Life Tech's genetic sequencing, which Thermo Fisher could choose to divest after a deal.

Industrial and healthcare conglomerate Danaher, which has a life sciences and diagnostics division, agreed to buy Life Tech's stake in a mass spectrometry joint venture with MDS Analytical Technologies for $450 million in cash in 2009.

Private equity firms have tried to compete in the auction by teaming up, a move that helps them reduce the size of their individual equity commitment but does not improve their returns.

The so-called club deals have become less popular in recent years over concerns about corporate governance in acquired companies and a backlash from some fund investors who see little point in having exposure to a company through more than one buyout fund.

People close to the Life Tech sale process said buyout firms could struggle to achieve internal rates of return of 15 percent or more on the deal based on the leverage Life Technologies could take on to capture a sufficient portion of the financing market in a transaction.

(Reporting by Soyoung Kim and Greg Roumeliotis in New York; Editing by Gerald E. McCormick, Matthew Lewis and Steve Orlofsky)

FILED UNDER:
  • Most Popular
  • Most Shared
Biotech Leap

Biotech Leap

World's top drugmaker Novartis takes aim at tech  Full Article 

Bird Flu

Bird Flu

Bird flu found in UK, Netherlands but authorities say little risk to humans  Full Article 

Drug Abuse

Drug Abuse

‘Tweens’ most likely to misuse over-the-counter meds.  Full Article 

Nutrition Value

Nutrition Value

School lunches may be better than lunch packed at home.  Full Article 

Smoking Problem

Smoking Problem

U.S. youth smoking, increased use of e-cigarettes a worry: CDC.  Full Article 

No Progress

No Progress

Progress on eliminating measles has stalled, WHO warns.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage