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Abaxis (ABAX) and Zoetis Merger Deal Crosses HRS Hurdle

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Abaxis Inc., is close on the heels of its takeover bid by Zoetis Inc. (ZTS - Free Report) , which was announced last May. To this end, the company recently stated that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) has expired.

The transaction is still subject to other customary closing conditions including the approval of Abaxis shareholders. Accordingly, on Jul 31, 2018, the company’s stockholders will vote on the transaction, soon  after which, the acquisition should get closed.

Meanwhile, let us glance through the deal details once again.

Animal health company Zoetis has made an all-cash offer of $83 per share or $2 billion in total value to Abaxis shareholders. This is a 15.7% premium to the close of Abaxis’ share price at $71.75 on May 14, denoting the figure just before the news release.

Expected Synergy Benefits

With the adoption of Abaxis’ point-of-care diagnostic instruments, Zoetis expects the consolidated company’s veterinary diagnostics category to grow faster than the animal health industry. Per management, the integration will fetch in significant synergy benefits to the company.

Abaxis announced that it has recently invested in expanding operations across Europe, Latin America and the Asia Pacific region with 20% revenues expected to be drawn internationally in fiscal 2018. Meanwhile, Zoetis already has a substantial global presence and direct veterinary customer relationships for delivering greater value to more customers worldwide. Undoubtedly, the buyout under discussion will then accelerate growth for the combined entity’s overseas business.

Per a Markets and Markets report, the veterinary diagnostics market is anticipated to witness a CAGR of 9.3% between 2017 and 2022 to reach a value of $3.62 billion by 2022.

Share Price Performance

In the past three months, shares of Abaxis have rallied 16%, outperforming the industry’s 10.2% growth.

Zacks Ranks & Key Picks

Abaxis currently carries a Zacks Rank #3 (Hold). Two better-ranked stocks from the broader Medical space are Genomic Health and Align Technology, Inc. (ALGN - Free Report) .

Genomic Health has an expected earnings growth rate of 187.5% for the quarter to be reported. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Align Technology has a projected long-term earnings growth rate of 28.4% and a Zacks Rank #2 (Buy).

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