Beckman strategic bidder interest cools: sources

By Soyoung Kim and Megan Davies

NEW YORK (BestGrowthStock) – Interest in Beckman Coulter (BEC.N: BEC.N, BEC.N, BEC.N) from strategic bidders is waning as a recent runup in the medical testing company’s stock threatens to drive away price sensitive buyers, several sources familiar with the situation said on Friday.

That could give the advantage to private equity firms, which have been pairing up to bid for the company, valued at $5.1 billion according to Friday’s closing share price.

Beckman’s shares fell 2.1 percent to close at $74.41.

Diversified industrial companies Danaher Corp (DHR.N: DHR.N, DHR.N, DHR.N) (DHR.N: DHR.N, DHR.N, DHR.N) remains in the auction for Beckman, one source familiar with the matter said. Still, two separate sources cautioned that Danaher prefers to do deals around half the size of Beckman and is concerned that it doesn’t overpay.

It was unclear whether any other strategic firms are still keen, three sources said.

Final-round bids for the company are due in early February, so the situation could still change over the next few weeks, the sources said.

“Strategic bidders” refers to corporate buyers that are in the same sector as a target and may thus be able to extract cost savings by merging their businesses — as opposed to private equity buyers, which typically buy targets using debt.

Beckman hired Goldman Sachs Group Inc (GS.N: GS.N, GS.N, GS.N) to help it weigh strategic options, including a possible sale of the company, sources told Reuters last year.

Initial offers were due before Christmas and a number of private equity firms and strategic companies submitted bids.

Among strategics that have been interested in Beckman have been health care equipment maker Thermo Fisher Scientific Inc (TMO.N: TMO.N, TMO.N, TMO.N), one source familiar with the situation previously told Reuters. Industry bankers have said in the past that General Electric (GE.N: GE.N, GE.N, GE.N) may also have been interested.

Strategic bidders can typically pay more for companies than private equity buyers as they can generate greater cost savings and efficiencies from merging similar companies.

Some strategic buyers have been skittish about making an acquisition of Beckman’s size, one of the sources said, while a run-up in Beckman’s stock price is also concerning some bidders, another of the sources said. Beckman’s shares have risen 33 percent since the day before reports that it was up for sale were first published.

If Beckman is bought by private equity firms, it will rank as one of the biggest leveraged buyouts since the financial crisis limited access to debt financing for deals.

Private equity bidders for Beckman have been forming consortia, sources familiar with the matter previously told Reuters, as Beckman’s size means it is unlikely one private equity firm alone can bid for the firm.

Blackstone (BX.N: BX.N, BX.N, BX.N) and Kohlberg Kravis Roberts & Co (KKR.N: KKR.N, KKR.N, KKR.N) are joining up, sources previously told Reuters. Apollo (APOLO.UL: APOLO.UL, APOLO.UL, APOLO.UL) and Carlyle (CYL.UL: CYL.UL, CYL.UL, CYL.UL) also remain in the auction and are likely to team up, two separate sources told Reuters earlier this week.

Bain, which had originally looked to pair with Carlyle, put in a bid in the first round, but its interest has since waned, two sources told Reuters earlier this week.

Beckman Coulter, Danaher, Thermo Fisher and GE were not immediately available for comment. Goldman Sachs declined comment.

(Reporting by Soyoung Kim and Megan Davies in New York; Additional reporting by Jessica Hall in Philadelphia, editing by Dave Zimmerman, Gary Hill and Bernard Orr)