Danaher to Acquire Cepheid for $4 Billion

Danaher Corporation announced 6 Sept. that it has entered into a definitive merger agreement with Cepheid pursuant to which Danaher will acquire all of the outstanding shares of Cepheid for $53.00 per share in cash, or a total enterprise value of approximately $4 billion including indebtedness and net of acquired cash.
 
Cepheid is a global molecular diagnostics company that develops, manufactures, and markets accurate and easy to use molecular systems and tests. Cepheid’s fully automated GeneXpert systems enable rapid, sophisticated genetic testing and provide test results for the management of infectious diseases, among many clinical applications. With the largest global installed base of instruments and the broadest test menu available in molecular diagnostics, Cepheid delivers a unique, scalable and accessible system for institutions of any size and sophistication. Based on its public disclosures, Cepheid generated annual revenues of $539 million in 2015, with double-digit year-on-year organic revenue growth and greater than 75% of these revenues considered recurring. Cepheid has disclosed that in 2016 it expects to generate $618 to $635 million in revenues. Headquartered in Sunnyvale, Calif., Cepheid will become part of Danaher’s $5 billion Diagnostics segment, joining the Company’s Beckman Coulter, Leica Biosystems and Radiometer businesses.
 
Danaher’s President and CEO, Thomas P. Joyce, Jr., said, “We expect Cepheid to be an excellent complement to our existing Diagnostics businesses and to expand our runway for growth across the platform. Cepheid’s extensive installed base, test menu and innovative product offering contribute to its market leadership in molecular diagnostics and we expect it to strengthen our position in this high-growth segment.”
 
Joyce continued, “By applying the Danaher Business System and combining Cepheid with our existing $5 billion revenue position in the diagnostics industry, we believe that Cepheid will be well-positioned to improve operational efficiencies, significantly expand margins and drive long-term growth. We look forward to welcoming the Cepheid team to Danaher.”
 
The acquisition has been unanimously approved by the Board of Directors of each company, and the Cepheid Board of Directors has unanimously recommended that Cepheid shareholders approve the transaction. The offer is subject to customary conditions, including approval by Cepheid’s shareholders and receipt of applicable regulatory approvals. The transaction is expected to be completed around the end of calendar year 2016.
 
Danaher estimates the Cepheid acquisition will be moderately dilutive to GAAP diluted net earnings per share and approximately $0.05 accretive to non-GAAP, adjusted diluted net earnings per share in the first full year post acquisition. In the fifth full year post acquisition, the Company expects the acquisition to be approximately $0.30 accretive to non-GAAP, adjusted diluted net earnings per share. The non-GAAP, adjusted diluted net earnings per share figures exclude non-cash amortization, purchase accounting charges and transaction expenses attributable to the acquisition. 
 
Danaher expects to finance the transaction with available cash and proceeds from the issuance of debt.