Life Technologies Takeover at Lowest Valuation Beats No Deal: Real M&A

Published: Mar 13, 2013

A takeover of Life Technologies Corp. (LIFE) at one of the lowest multiples on record would still be better for shareholders than no deal at all. The $10.7 billion life-sciences company has drawn interest from a buyout group, which includes Blackstone Group LP (BX) and Carlyle Group LP (CG), as well as competitors, people with knowledge of the matter said last week. Life should sell for at least $65 a share, said Robert W. Baird & Co. While that price would imply the industry’s second-lowest deal valuation on record, it still tops analysts’ $53.24 average estimate for Life’s stock as a standalone company, according to data compiled by Bloomberg. Life began exploring a sale last year and has traded for a discount to its peers as investors question the growth prospects for its gene-sequencing business, which makes technology used to provide a blueprint of a person’s DNA. The company also sells products that scientists use in labs for cancer and stem cell research. While private-equity suitors may not be able to justify a price higher than $65 a share, another health-care company such as Thermo Fisher Scientific Inc. (TMO) could pay up to about $70, International Strategy & Investment Group LLC said. “Life’s stock has underperformed, so something needs to be done to unlock the value,” Ross Muken, a New York-based analyst with ISI, said in a telephone interview. “If they don’t think they can fix the sequencing business, then a deal would be viewed as being fairly attractive. Without all of this, the stock would be in the low to mid $50s right now.” Suzanne Hatcher, a spokeswoman for Life, declined to comment on specific bidders or prices.

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