From its headquarters in Washington, DC, Danaher Corporation (NYSE: DHR) announced on Tuesday, September 6, 2016, that it will be merging with Cepheid (NASDAQ: CPHD) in a deal valued at close to $4 billion. The acquisition, when completed in the fourth quarter, is expected to expand Danaher’s $5 billion diagnostics business by over 10 percent. Under the terms of the agreement, Danaher will acquire, for cash, all of the outstanding shares of Cepheid at $53.00 per share. The acquisition price represents a 54 percent premium on Cepheid’s Friday closing price of $34.42 per share, which, based on the 72.9 million outstanding Cepheid shares as of June 30, values the deal at $3.86 billion.
Announcing the proposed merger, Danaher’s president and CEO, Thomas P. Joyce, Jr., commented:
“We expect Cepheid to be an excellent complement to our existing Diagnostics businesses and to expand our runway for growth across the platform. Cepheid’s extensive installed base, test menu and innovative product offering contribute to its market leadership in molecular diagnostics and we expect it to strengthen our position in this high-growth segment.”
Revenues at Cepheid have been growing rapidly, more than doubling from the 2011 figure of $277 million to $539 million in 2015. Projections for revenues in 2016 fall between $618 and $635 million. Sunnyvale, California-based Cepheid develops molecular systems and tests allowing institutions to perform genetic testing for organisms and genetic diseases. The company’s GeneXpert systems enable genetic testing and provide test results for critical infectious disease, sexual health and virology, and other clinical applications.
Joyce explained the benefits of the merger:
“By applying the Danaher Business System and combining Cepheid with our existing $5 billion revenue position in the diagnostics industry, we believe that Cepheid will be well-positioned to improve operational efficiencies, significantly expand margins and drive long-term growth. We look forward to welcoming the Cepheid team to Danaher.”
Cepheid boasts the largest global installed base of instruments and the broadest test menu available in molecular diagnostics and is able to offer a unique, scalable and accessible system for institutions of any size and sophistication. Cepheid will join Danaher’s already existing diagnostics divisions, such as AB Sciex, Beckman Coulter, Hemocue, Leica Biosystems, Leica Microsystems, Pall and Radiometer.
Despite its improving revenues, Cepheid has had a history of losses dating back to the company’s founding in 1996. In 20 years, it has seen only one profitable year. Danaher, on the other hand, is a hugely profitable company. In 2015, it had revenues of $20.6 billion on which it earned $3.4 billion.
For more information, visit www.Danaher.com
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