Danaher, a medical technology company, will spend $5.7 billion to acquire Abcam

Danaher Corp, a prominent medical tools supplier, has unveiled plans to acquire Abcam Plc, a smaller rival, in an all-cash transaction valued at $5.7 billion, inclusive of debt. This strategic move aims to broaden Danaher’s services and secure larger contracts within the medical tools industry.

The acquisition of Abcam is designed to counterbalance Danaher’s recent challenges stemming from sluggish demand for its products, including antibodies and sample preparation equipment. These demand issues primarily affect smaller biotech companies grappling with limited funding resources.

Amid a year of multiple downward revisions to its annual sales growth forecast, Danaher views this acquisition as a tactical solution to the challenges it has encountered. While analysts have expressed approval for the deal’s alignment with Danaher’s goals, some have also noted the potential for even larger transactions.

Danaher, boasting a market value close to $190 billion, anticipates finalizing the acquisition by mid-2024, with a projected 20-cent increase in adjusted earnings per share during the first full year after completion.

The offer proposed by Danaher amounts to $24 per share for Abcam, marking a 2.7 percent premium over the stock’s most recent closing price and a nearly 26 percent premium since Bloomberg’s mid-June report on Abcam’s potential acquisition.

Although Abcam’s shares declined by roughly 4.5 percent to $22.44 following the announcement, Danaher’s shares experienced a 1.4 percent increase in early trading.

Abcam, headquartered in Cambridge, England, specializes in providing protein consumables such as antibodies and reagents for life sciences research, drug discovery, and diagnostics. The company’s decision to sell itself was driven, in part, by activist shareholders, including founder Jonathan Milner (who owns 6.1 percent of the company) and hedge fund Starboard Value LP.

This acquisition falls in line with Danaher’s track record of recent deals, including the acquisition of General Electric Co’s biopharma solution business for $21.4 billion in 2019 and contract development and manufacturing organization Aldevron for $9.6 billion in 2021.