|Marc Casper, Thermo Fisher CEO|
Just when Thermo Fisher Scientific ($TMO) thought it had reached the finish line of its previously announced $1.3 billion deal for gene editing firm Affymetrix ($AFFY), things got complicated. A shell company recently put up an 11th-hour takeover bid meant to derail the sale. But at least for now, Affymetrix isn't buying it.
San Francisco-based Affymetrix on Sunday rejected $1.5 billion offer from Origin Technologies, a firm that includes some of the company's former top execs. Origin, which was bidding for new genetics analysis company Centrillion Technology Holdings, said that it would offer Affymetrix shareholders $16.10 a share in cash, 15% more than Thermo Fisher's offer of $14 a share. Origin would also pay Affymetrix's breakup fee to Thermo Fisher if the earlier deal fell apart.
But this was not enough to entice Affymetrix, who said that it would stick with its original plan to sell out to Thermo Fisher. Affymetrix last year talked to Origin and "invited them to submit a written proposal if they had serious interest in a strategic transaction" with the company, Affymetrix CEO Frank Witney said in a statement. "We heard nothing further from them for over four months until they announced their unsolicited proposal on March 18," Witney said.
Affymetrix is "firmly committed" to its deal with Thermo Fisher, he added. Origin's attempts came days before Affymetrix shareholders were scheduled to vote on the sale to Thermo Fisher.
Thermo Fisher was quick to point to potential flaws in a deal with Origin. Origin's bid included a "vague and insufficient financing package" from Chinese private equity firm SummitView Capital, Thermo Fisher CEO Marc Casper said in a statement. And Origin's proposal "is highly uncertain and speculative and does not constitute, and could not reasonably be expected to lead to, a superior proposal," he added.
Waltham, MA-based Thermo Fisher in a letter to Affymetrix stockholders also laid out a few reasons why a deal with origin wouldn't work. Origin and its financing sources have "little to no credibility in the marketplace," Casper said.
And an Origin deal could face more regulatory hurdles. The Committee on Foreign Investments in the United States (CFIUS) is particularly strict about Chinese investments and could target a potential sale, Casper said in the note. Thermo Fisher's bid, in contrast "has been unanimously approved by both boards of directors" and "contains no financing conditions or contingency," Casper said.
Origin is not going down without a fight. The company is "committed to completing a friendly transaction with Affymetrix" and stands by its previous offer, it said in a statement after Affymetrix rejected its recent bid. "Our highly compelling offer provides an opportunity for Affymetrix stockholders to realize additional value through a significantly more attractive premium than the proposed transaction with Thermo Fisher, and we are confident in our ability to close our transaction expeditiously," Origin said.
The company is planning to talk to Affymetrix's board of directors "to address their concerns and complete confirmatory diligence," Origin said. "We believe it would be in the best interests of all parties for the Affymetrix Board to engage with us without delay."