Under Icahn's pressure, Hologic's M&A prospects heat up

Carl Icahn

Now that activist investor Carl Icahn has shown his hand of Hologic ($HOLX) shares, the sluggish diagnostic giant is likely to attract some buyout attention, and analysts are split on whether the company should sell itself outright or flip its individual units.

As Bloomberg reports, the news that famed corporate raider Icahn and his confederates own 12.6% of Hologic has put the company in the spotlight, and while Hologic has adopted a poison pill plan to fend off any share-based takeovers, analysts figure Icahn will be able to sway the board toward M&A. ISI figures a sale of all or some of Hologic is a sure thing, and the $6.1 billion company could be a fit for giants like Siemens ($SI) and Danaher ($DHR), owners of multibillion-dollar healthcare arms.

If the company wants to sell itself outright, analysts quoted by Bloomberg figure it could go for between $27 and $32 per share, valuing it at nearly $8 billion. On the other hand, Hologic may find it more lucrative to ship out its businesses one by one, finding buyers for its diagnostics, breast health, gynecological and skeletal units. However, sending the revenue-generating diagnostics and women's health segments out the door could cripple the company, SunTrust's Amit Hazan told Bloomberg, as Hologic needs a healthy sales flow to pay down its $4.8 billion in debt.

The company is in the midst of yet another "transitional year," as new CEO Jack Cumming put it, still working out its identity after absorbing fellow diagnostics heavyweight Gen-Probe in a $3.8 billion buyout last year. Since then, Hologic has shaken up its boardroom, sold off business units and pared down its offerings, all the while watching projections, profits and share prices slide.

Now, whatever comes of Icahn's interest, analysts and investors agree that it's good news for a stock that has long under-performed its peers, and the possibility of a buyout has moved the company's shares about 3% upward since last week.

"My guess is after Icahn filed his position in the company, a number of investment bankers started sharpening their pencils and really looking at the numbers in detail," Matrix Asset Advisors' David Katz told Bloomberg.

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