Danaher Corp said on Monday it would buy smaller rival Abcam Plc in an all-cash deal valued at $5.7 billion including debt, as the medical tools supplier expands its services to capture bigger contracts.
The deal will help Danaher cushion the hit from sluggish demand for its products such as antibodies and sample preparation equipment from smaller biotech companies that are grappling with a funding crunch.
Danaher, one of the world's largest suppliers of medical tools, has already cut its annual sales growth forecast multiple times this year.
"This is a nice tuck in deal for Danaher that checks all the boxes. In an ideal scenario, we would have perhaps liked to see something larger," said Evercore ISI analyst Vijay Kumar.
Reuters reported on Friday that Danaher was in the lead to acquire Abcam.
Danaher, which has a market value of nearly $190 billion, expects the deal to close in mid-2024 and add to adjusted earnings per share by 20 cents in the first full year after completion.
The company has offered $24 per Abcam share in cash, a 2.7 percent premium to the stock's last closing price, and a nearly 26 percent premium since Bloomberg reported in mid-June that the company was fielding takeover interest.
Abcam's shares fell about 4.5 percent to $22.44, while Danaher's shares rose 1.4 percent in early trading.
Abcam is Danaher's latest deal in recent years. It acquired General Electric Co's biopharma solution business for $21.4 billion in 2019 and contract development and manufacturing organisation Aldevron for $9.6 billion in 2021.
Cambridge, England-based Abcam supplies so-called protein consumables such as antibodies, reagents and other products used for life sciences research, the discovery of drugs and diagnostics.
It came under pressure from activist shareholders to sell itself, including its founder Jonathan Milner who owns 6.1 percent of the company, as well as hedge fund Starboard Value LP.
