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Bio-Rad to Buy AbD Serotec

BIO

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Bio-Rad Laboratories (BIO - Snapshot Report), a worldwide provider of life science research and clinical diagnostic products, recently inked a definitive agreement to acquire AbD Serotec, a division of MorphoSys AG for a cash payment of about $70 million (€53 million). Expected for closure in January 2013, the transaction is subject to certain closing conditions.

MorphoSys AG is a German biotechnology giant with a significant footprint across the globe. It declared revenues of €100.8 million in 2011, signifying an annual rise of almost 16%. MorphoSys’ AbD Serotec unit is well regarded for generating monoclonal antibodies for applications in research as well as the diagnostics market.

Whilst we await further details on the agreement, this acquisition will enhance Bio-Rad’s Life Science Research segment as well as its mainstay Clinical Diagnostic franchise. The company serves a global market size of $10 billion and $5 billion for Clinical Diagnostics and Life Science Research, respectively. The transaction is expected to strengthen the company’s market position.

Post acquisition, the company will offer total assay solutions to its consumers using a comprehensive catalog of antibodies. The assay solutions can be validated on Bio-Rad’s research area for western blotting, multiplex protein expression, Elisa and cell sorting. Further, the acquisition will enable the company to accelerate future antibody generation by exploiting in- vitro technology.

With an improved portfolio, Bio-Rad should be able to gain an edge over its competitors. Also, higher revenues and substantial goodwill enhancement seems to be on the cards for the company due to the complementary portfolio of AbD Serotec. We are rather optimistic regarding Bio-Rad’s ability to accelerate growth via inorganic means.

We currently have a long-term ‘Neutral’ recommendation on the stock which carries a short-term Zacks #3 Rank (Hold). Its peer in the life science market, Life Technologies carries a Zacks #2 Rank (Buy).

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