Thursday, February 21, 2013

Life Technologies dips 8%

Life Technologies dropped 8 percent yesterday to $58.83 on news that potential buyout offers have disappeared because of the recent run up in the firm's market value. On Jan 18, Life Technologies released a press announcement confirming that the bank has hired bankers to conduct a "strategical review" of the company, fueling speculation that private equity firms and larger life sciences companies are looking to buy out the firm. That speculation led to the company reaching a new high of just below $65 a share. Due to the recent gain in stock price however, Thermo Fisher Scientific Inc has reportedly withdrawn their offer to buyout the company at current price levels. A potential deal with Thermo Fisher Scientific would compliment both companies' current portfolio of life sciences tools, although it is rumored that Thermo Fisher doubts their offer will be accepted by the Life Technologies' board at current price levels.

In more positive news yesterday, Life Technologies also released details of an expansion of their Ion Torrent systems. They announced about a dozen new products that the company expects to continue the push to become the market leader in bench top genome sequencers, already controlling about 60% of the market. There has been great demand for the company's sequencers, driving revenue growth in the fourth quarter.

Overall, the news is underwhelming and its disappointing to see that buyout talks have reportedly stalled between Life Technologies and its potential suitors. At its current price targets, the life sciences company is trading above average in both earnings and EV/EBITDA relative to its peers. We will be waiting to see how the stock performs today to decide whether to exclude it from the portfolio and will update if any decisions are made.

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