Reports that Beckman Coulter Inc. is exploring a possible sale have sparked buzz among Wall Street analysts and speculation on a wide range of potential suitors.
Private equity firms, competitors, drug makers and others are being pegged as possible buyers of Brea-based Beckman.
Beckman, which makes machines and chemicals used by medical testing labs and researchers, reportedly has hired Goldman Sachs Group Inc. to explore a sale after seeing interest from private equity firms.
The company has declined to comment.
Beckman had a recent market value of $5 billion, after a 20% spike on word of possible buyout interest.
The company is wrestling with quality and regulatory issues stemming from a spring recall of a profitable heart disease test known as troponin.
The recall drove a big stock drop and 2010 profit revision, and likely attracted private equity firms as possible buyers.
A potential sale price of $5 billion “could represent a private equity valuation,” said Quintin Lai, an analyst with Milwaukee-based Robert W. Baird & Co., in a report.
Private equity firms could be looking to take Beckman private and give it cover as it works through its issues before taking it public again, Lai said.
Apollo Global Management LLC, Blackstone Group LP and Kohlberg Kravis Roberts & Co., all of New York, could be interested in Beckman, according to reports.
Beckman has “plenty of cash flow, (about) $250 million, to support a private equity takeout,” said analyst Bruce Jackson of New York’s Morgan Joseph LLP.
The company’s also been a long-speculated target for competing medical diagnostic companies. Those include Abbott Laboratories of the Chicago area, Germany’s Siemens AG and Roche Diagnostics Corp., a unit of Switzerland’s Roche Holdings Ltd.
A sale to a big rival in the highly consolidated industry could draw regulatory scrutiny, according to analysts.
Other Possible Suitors
Other strategic buyers, according to Lai, could include Johnson & Johnson, General Electric Co., which has been building up its diagnostic business, and Royal Philips Electronics NV of the Netherlands.
Beckman would “be an excellent addition to a company that is looking to expand its diagnostics business,” Morgan Joseph’s Jackson said.
In a report, Jackson named two other potential suitors—Indianapolis drug maker Eli Lilly & Co. and Danaher Corp., a Washington, D.C.- based conglomerate that owns Sybron Dental Specialties Inc., the Orange maker of dental products.
A deal, if any, is expected to take months to play out, according to Jackson.
The sale talk caps a wild year for Beckman.
In March, the company recalled troponin, which is used to detect a protein that signals heart problems. Beckman made undisclosed changes to the test that resulted in higher readings when run on its DxI machines, a workhorse used by hospitals and labs to run tests for doctors.
The company revised its 2010 profit projection downward and saw a big drop in its shares in the wake of the recall.
Fixes to troponin are in the works, with Beckman projecting it could be back on the market sometime in 2011.
Beckman’s recall also led to the September departure of former chief executive Scott Garrett. Beckman has said its board is undertaking a search for a permanent replacement for Garrett, who is staying on through mid-January to help with the transition.
Robert Hurley is serving as Beckman’s interim chief. Hurley, Beckman’s senior vice president of human resources, played a major role in the company’s $800 million buy of Olympus Corp.’s diagnostic business in 2009.
The chief executive search could prove unnecessary if Beckman is in talks to be bought by another company, analyst Lai said.
