The past few years have seen upstream and downstream supplier Pall carry out its fair share of M&As, buying ATMI and Medistad to boost its biotech offerings. But the acquirer could soon become the acquired, according to the Wall Street Journal.
The paper suggested the firm is in the late stages of an auction which could see it being snapped up for up to $13bn (€11bn) by either Thermo Fisher or Danaher.
Thermo Fisher is already a key player in the biopharmaceutical industry, cementing its place further through the $15.8bn acquisition of Life Technologies in March 2014, adding media, sera and purification consumables, as well as next-generation sequencing tech and a range of bioproduction platforms.
Danaher, meanwhile, boasts among 400 acquisitions since 1984 and owns, in the Life Sciences & Diagnostics sector, companies including Beckman Coulter, AB Sciex, and Leica Biosystems. The addition of Pall would enter Danaher into the filtration and separations market, described as a “highly attractive” proposition by Evercore ISI analyst Ross Muken.
“The business has appealing reach in high-growth markets and the company also offers a substantial long-term margin expansion opportunity,” he said in a note.
“Given all of the market conjecture re potential consolidation in the life sciences tools universe, we believe this announcement is positive overall,” he continued.
“As it relates to other potential targets, while Pall is likely to occupy one of the two acquirers mentioned above, the acquirer left out will likely pursue other assets in lieu of Pall. Thus this could actually help to spur further M&A vs. curtailing it, if it were to be consummated.”
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Jefferies' analyst Brandon Couillard said the deal was in line with Merck KGaA's acquisition of Sigma-Aldrich last year, though noted that Danaher may have the advantage in the bidding process, despite the obvious fit of Pall's assets with Thermo Fisher.
"Pall would complement Thermo Fisher's existing presence in up/downstream bioprocessing," he said. "While we have viewed Thermo Fisher as somewhat capacity constrained, we believe it could use equity to get a deal done."
However, "as a quasi-Industrial asset, Pall would likely please Danaher's core investor base, boost its recurring revenues and complement its Water Quality unit. Given Danaher's greater relative balance sheet capacity, we believe it has the upper-hand."