The ball in what’s been called a “three-way tennis game” between Fullerton’s Beckman Coulter Inc. and Inverness Medical Innovations Inc. to buy Biosite Inc. now appears to be in Inverness’ court.
Biosite, a San Diego maker of diagnostic tests, said late last week that it accepted a revised bid of about $1.67 billion, or $90 a share, from Beckman. The new offer is $5 a share higher than Beckman’s original $1.55 billion bid for Biosite.
It’s still not a done deal. Inverness could come back with another bid for Biosite.
“We believe the ball is now in the hands of Inverness, which will likely either raise their bid or walk away,” said Quintin Lai, an analyst with Robert W. Baird & Co. in Milwaukee, in a report.
Waltham, Mass.-based Inverness isn’t saying too much about its plans.
“We are now in a position to respond one way or another,” said Inverness spokesman Doug Guarino.
Investors still think Inverness, which came in with its higher $1.6 billion offer for Biosite shortly after Beckman’s first bid, could revise its offer.
Guarino declined to give a timeline for Inverness’ response.
Biosite’s shares were trading around $93 last week with a market value of $1.5 billion.
Beckman’s revised bid and Inverness’ original offer are higher than Biosite’s market value. Both account for stock options that haven’t been exercised yet.
Garrett Confident
Beckman Chief Executive Scott Garrett is confident.
“We believe that this transaction will create sustainable value for Beckman Coulter shareholders and represents a full and fair price for Biosite’s shareholders,” Garrett said in a call.
“At the revised price, we expect the transaction will immediately accelerate Beckman Coulter’s revenue growth (and) improve its operating margins,” Garrett said.
If Beckman wins Biosite, the deal won’t hurt 2008 earnings, Garrett said. Beckman could see an earnings boost from the acquisition, he said.
Beckman’s second offer is good through May 15. Inverness still could come in with a higher offer after that. Beckman would, however, be able to collect a $54 million termination fee if Biosite pulls out.
Beckman’s revised bid eliminates Biosite’s right to extend the $1.67 billion offer beyond May 15, Garrett said.
Biosite’s also not allowed to cash out stock options prior to rolling them over to Beckman either, he said.
“Longer term, we see ample opportunity to create substantial value through commercialization of Biosite’s rich pipeline of new products,” Garrett said.
Beckman makes instruments and chemicals for medical testing labs and researchers. Inverness is known for several testing products, including home pregnancy tests.
Analysts expected the revised offer from Beckman.
Greg Simpson of Stifel & Co. in St. Louis predicted that Beckman could come in with a bid of $90 to $92 a share for Biosite, according to an article in the Financial Times. The article said that Beckman would most likely raise its bid for Biosite to at least $88 a share before the deadline last week. It cited a pair of analysts, including Simpson, and an industry source.
Simpson said he’d be surprised if Beckman walked away from Biosite without offering a counter bid, even though Beckman’s first bid came under fire because it was more than 50% above Biosite’s shares at the time.
Beckman’s upped offer came about a week after Biosite told Beckman that it found Inverness’ $1.6 billion bid superior.
A bidding war had been called some time ago by Jeffrey Frelick, an analyst with Lazard Capital Markets.
“At this point, it appears that (Biosite’s) shareholders would look favorably on Inverness’ offer,” he said in an earlier interview. “And if Beckman wants to pursue the Biosite acquisition, it would likely have to raise its bid.
“I think you also have some folks who think they could stretch this to $90 to $93 if they want to get aggressive. But I don’t think they will go beyond that,” Frelick said.
He said he believed Inverness will likely remain aggressive in its pursuit of Biosite.
Boost to Beckman
Beckman’s revised deal would be at least neutral and any additional sales would be a boost to Beckman’s 2008 estimates, Frelick wrote in a recent note.
“We would be buyers of (Beckman) on today’s weakness, given the strategic fit the Biosite acquisition adds,” Frelick said.
Beckman is awaiting final word on the revised offer. It already has financing and regulatory approvals lined up, and promises a quick close.
“We think (Beckman) is positioning its matched offer as superior due to completion of regulatory clearance and ability to close in May,” Lai wrote in his report.
