OVerview

Qiagen, the Dutch healthcare giant, has launched a test for Covid-19, no doubt increasing Thermo Fisher’s enthusiasm for its takeover of the diagnostics group.  The Financial Times recently reported on a wave of consolidation in the international medical devices and diagnostics markets, with GE Biopharma, CR Bard, Pall, Patheon and VWR all succumbing to multi-billion dollar bids from US buyers for attractive multiples.

Closer to home, the UK’s headline healthcare deal of 2019 was the takeover of BTG, the diversified developer and manufacturer of devices and drugs, by Boston Scientific.  The £3.3 billion price implied an EV/ multiple of 21x, a multiple that puts BTG up there with the other mega-deals of recent years.

sMALLER HEALTHCARE DEALS

Further down the deal size spectrum, there was also healthy M&A activity.  In January of this year Recipharm, the Swedish pharmaceutical contract development and manufacturing organisation, completed its acquisition of Consort Medical, the specialist in drug-delivery technologies.  Recipharm paid £627 million, implying an EBITDA multiple of 13x.  This price was priced at a premium of 39% on Consort’s pre-bid share price.

Blue Earth Diagnostics, an Oxford-based pharmaceutical and molecular imaging diagnostics business, was acquired by Bracco Imaging in July 2019 for £400m.  The 24x EBITDA multiple reflected the fast growth of Blue Earth following regulatory approval of its product in the US in 2016 and delivered a 10x return on investor Syncona’s original investment.

Bioquell, the designer and manufacturer of high performance bio-decontamination solutions, accepted a bid of £140 million from Ecolab, Inc, the US water, hygiene and energy giant, in January 2019.  The price was a robust 40% premium to the pre-offer period share price and represented 17x EBITDA.

Abcam PLC’s acquisition of Expedeon’s Proteomics and Immunology business in January 2019 for €120m illustrated the attractions of protein labelling – the attachment of molecular ‘labels’ to proteins to aid detection.  Despite paying a revenue multiple of 9x and an EBITDA multiple of 120x, Abcam expected the developer and manufacturer of proteomics reagents and tools to be earnings accretive from its first full year of ownership.

aNALYSIS

The pricing of these deals demonstrates the attractiveness of a sector designing and supplying the tools to fight infectious diseases.  With coronavirus dominating the media, healthcare may be one of the few sectors where M&A demand and pricing remain robust.

All data sourced from MarktoMarket. 

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