Life Tech Exploring Potential Sale

18.01.2013 -

Life Technologies is exploring a potential sale and has retained banks to advise on the process, sending shares of the biotechnology company 11% higher to an all-time high on Friday.

Life Technologies, whose market value surged to roughly $10.5 billion, said on Friday its board has hired Deutsche Bank Securities and Moelis & Company to assist in its "annual strategic review."

The Carlsbad, California-based company, which makes genetic testing equipment and products used in biotechnology development, has drawn initial interest from several large private equity firms, a person familiar with the matter said.

Given the sheer size of a potential leveraged buyout, private equity firms are expected to team up as the sale process advances, the person said, adding that the auction is still at an early stage and interested parties have yet to conduct due diligence.

The person asked not to be named as details of the auction are not public. Life Technologies said its board of directors has not decided on any specific course of action.

News of the potential sale adds to expectations that robust debt financing markets could lead to a return of the mega leveraged buyouts, which have remained elusive since the 2008 financial crisis.

In another potential deal that would mark the largest private equity deal since the global financial crisis, buyout firm Silver Lake Partners is in discussions to take Dell private, people familiar with the matter have said.

Gene-sequencing companies such as Life Technologies have become takeover targets over the last year by potential buyers seeking to acquire the technology that can be used to analyze a person's DNA and help provide personalized medicine.

Last year, Roche made a hostile attempt, unsuccessfully, to buy San Diego-based gene sequencing company Illumina. Shares of Illumina were down 1.3% to $50.90 on Friday, valuing the company at around $6.3 billion.

Shares of Life Technologies were up more than 11% to $61.36 on the Nasdaq stock market.

Canadian newspaper Financial Post, which earlier reported the sale process, said a potential deal for Life Technologies could come in the $65-$75 per share range.

"While price talk is reported to be in the $65 to $75 range, our initial analysis suggests an LBO transaction valuing Life's equity in the $50 to $60 range is at present more realistic," Jefferies & Co analyst Jon Wood said in a note.

While the company's strong revenue, scalable operating model and capital efficiency may support a higher sale price, buyers had less appetite for risk following the 2008 financial crisis, Wood added.