Immucor Moves Towards Being Taken Over

Recently, IVD Acquisition Corporation, an affiliate of TPG Capital initiated the earlier-announced tender offer for all outstanding shares of Immucor (BLUD) at $27.00 per share, in cash.

Earlier this month, private equity group TPG Capital decided to acquire Immucor for $1.97 billion. The deal is expected to be completed in the second half of 2011 and is subject to regulatory  and shareholder sanction. Established in 1992 with $48 billion of assets under management, TPG Capital is a leading global private investment firm with offices spread across the globe.

Immucor suffered several setbacks over the past few quarters on the back of a slowdown in the blood industry. Several small donor centers have closed their operations due to lackluster demand arising from economic uncertainty. Tighter hospital budgets and uncertainty in the healthcare market have affected orders and delayed decision making processes. Moreover, the number of uninsured and underinsured patients has increased thereby, negatively influencing the demand in this industry.

Revenues from traditional reagents (contributing 61% to total sales) remained challenged in the recent past. Immucor lost some traditional reagent customers due to its inability to provide the required services and attention as it was concentrating on instruments.

The company was also hampered by several quality control issues. Moreover, in June 2011, Immucor’s President, CEO Dr. Gioacchino De Chirico resigned and was replaced by Joshua H. Levine (former President and CEO of Mentor Corporation).

However, in spite of all the recent headwinds, Immucor holds promise due to sound business opportunities. The company witnessed continuous expansion in its top line, especially in capture reagent sales and instrument revenues.

Moreover, the company is gradually increasing its emphasis on product development and distribution. Although we reiterate our ‘Neutral’ recommendation on the stock, given the $27 per share acquisition price, the upward potential is limited.

Read the full analyst report on BLUD