|Marc Casper, Thermo Fisher CEO|
Thermo Fisher Scientific ($TMO) CEO Marc Casper has a message to Affymetrix ($AFFY) stockholders about its planned $1.3 billion buyout of gene editing firm: Make the right decision.
The Thermo Fisher helmsman today sent a letter to shareholders, urging them to approve the deal at a stockholder meeting later this week. Last week, shell company Origin Technologies put up a last-minute takeover bid to derail the sale. But Affymetrix has so far rejected Origin's advances.
"With the scheduled Affymetrix stockholder meeting just two days away, we felt it was important to reemphasize our strong belief that our Merger Agreement continues to offer more value and carries far less risk for you, as Affymetrix stockholders," Casper said in the note.
Origin, which was bidding for new genetic analysis company Centrillion Technology Holdings and consists for former Affymetrix execs, said last week that it would offer Affymetrix shareholders $16.10 a share in cash, 15% more than Thermo Fisher's offer of $14 a share. The company also agreed to pay Affymetrix's breakup fee to Thermo Fisher if the earlier deal collapsed.
But this was not enough to sway San Francisco-based Affymetrix, which on Sunday rejected the bid. Affymetrix is "firmly committed" to its deal with Thermo Fisher, Affymetrix CEO Frank Witney has said. The company last year talked to Origin about a potential deal, but then "heard nothing from them for over four months until they announced their unsolicited proposal on March 18," Witney said.
The timing of Origin's bid, which came a few days before Thermo Fisher and Affymetrix planned to close the deal, "is even more outrageous in view of the fact that Origin Technologies apparently participated in discussions with Affymetrix in the fall of 2015," Casper said. Origin had all the time in the world to make a bid, Casper said, but instead, it waited until the 11th hour.
Plus, there are more obstacles associated with a potential Origin deal than one with Thermo Fisher, Casper was quick to point out in his note. Origin's bid, which is financed by Chinese private equity firm SummitView Capital, is "highly contingent, uncertain and insufficient" with "glaring holes" in funding, Casper said.
And a deal with Origin could mean more regulatory scrutiny. The Committee on Foreign Investments in the United States (CFIUS) is doubling down on Chinese investments and could target a potential sale, Casper said. "A transaction on terms described in the Origin Proposal could not possibly be completed in any timeframe that Affymetrix or its stockholders would consider acceptable, if it could be completed at all," Casper said.
Casper also pointed to perks of a Thermo Fisher/Affymetrix merger. The deal has already gotten "all required approvals" and doesn't have any open ended conditions, Casper said. It also stands to benefit both sides, he added.
"The driving force behind our intent to acquire Affymetrix is the terrific opportunity we have by maximizing the potential of our combined offerings to drive growth in biosciences and genetic analysis. Like Affymetrix, we are also committed to high-impact R&D, which will be enhanced as a result of this combination. The Affymetrix team will benefit by being part of an industry-leading company that offers many opportunities for career growth and development," Casper said.
Still, Origin is not backing away with its tail between its legs. The company recently upped its offer to Affymetrix to $17 per share, a 21.4% premium to Thermo Fisher's offer. Origin also said that it would increase its reverse termination fee to $100 million if Affymetrix's deal with Thermo Fisher falls through.
Origin President Wei Zhou in a letter dated March 22 asked Affymetrix's board of directors to delay a stockholder meeting later this week to sign off on the Thermo Fisher agreement. Then, Origin "can allay any concerns" shareholders may have about the company's proposal and discuss a "win, win, win solution for all parties," Zhou said.
"Once you engage with us and we are able to share confidential information, we are prepared to provide additional details regarding our financial resources that we are highly confident you will find compelling," Zhou said in the letter.