PerkinElmer to buy diagnostic player Euroimmun for $1.3B

PerkinElmer's headquarters in Waltham, MA--Courtesy of PerkinElmer

PerkinElmer has agreed to buy Euroimmun Medical Laboratory Diagnostics for about $1.3 billion. The all-cash takeover will round out PerkinElmer’s global diagnostics portfolio through the addition of autoimmune, infectious disease and allergy tests.

Germany’s Euroimmun has grown into a business with 2,400 employees and annual revenues in the range of $310 million on the strength of its leadership position in the autoimmune test sector. Euroimmun’s autoimmune portfolio features tests for diseases including sporadic inclusion body myositis and membranous nephropathy.

The 30-year-old diagnostics player has used its position in the autoimmune sector as a beachhead from which to expand into the infectious disease and allergy test markets. Euroimmun has pinned its growth in these fields on tests for the Zika virus, pregnancy-relevant infections and allergies to birch and Timothy grass pollen.

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PerkinElmer wants to slot these tests into a portfolio currently skewed toward reproductive health, gene analyses and molecular cancer tests. And management plans to use its U.S. sales infrastructure, particularly that supporting the reproductive health unit, to grow sales of the acquired diagnostics.

The Americas accounted for 5% of Euroimmun sales last year. The limited exposure of Euroimmun to the U.S. gives PerkinElmer an opportunity to further expand a business that has averaged 19% sales growth over the past five years.

Euroimmun could also help PerkinElmer grow sales of its own tests. Almost half of Euroimmun’s 2016 revenue came from China. PerkinElmer highlighted the chance to strengthen its position in China and other emerging markets as part of the appeal of the takeover. 

PerkinElmer expects to close the deal in the fourth quarter and receive a near-immediate boost to its earnings per share. Management expects the takeover to add around $0.30 to non-GAAP EPS in 2018. Non-GAAP EPS for 2017 is forecast to come in between $2.80 and $2.90.