GenMark Diagnostics acquired by Roche: fairness opinion by J.P. Morgan
Deal terms
Implied value per share by method vs. $24.05 offer
Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.
Opinion of J.P. Morgan to the target board
Discounted cash flow assumptions
Unlevered free cash flows for calendar years 2021 through 2030 discounted to present value as of December 31, 2020; terminal values based on perpetuity growth applied to 2030 unlevered free cash flow; net cash as of December 31, 2020 added; fully diluted shares using treasury stock method
Selected public companies (9)
Hologic, Inc. · bioMérieux SA · Bio-Rad Laboratories, Inc. · PerkinElmer, Inc. · QIAGEN N.V. · Quidel Corporation · Luminex Corporation · OraSure Technologies, Inc. · Fluidigm Corporation
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| FV / CY2022E Revenue | — | — | — | 2.3x–6.0x | $7.75–$19.25 |
Selected precedent transactions (8)
| Date | Target | Acquirer | Multiple |
|---|---|---|---|
| 2021-01-07 | Oxford Immunotec Global PLC | PerkinElmer, Inc. | — |
| 2019-07-11 | BioTek Instruments, Inc. | Agilent Technologies Inc. | — |
| 2019-02-25 | GE Biopharma | Danaher Corporation | — |
| 2016-09-06 | Cepheid | Danaher Corporation | — |
| 2016-05-27 | FEI Company | Thermo Fisher Scientific Inc. | — |
| 2016-01-08 | Affymetrix Inc. | Thermo Fisher Scientific Inc. | — |
| 2014-01-29 | DVS Sciences, Inc. | Fluidigm Corporation | — |
| 2013-09-03 | BioFire Diagnostics Inc. | bioMérieux SA | — |
| Multiple | Low | Median | High | Range applied | Implied per share |
|---|---|---|---|---|---|
| FV / LTM Revenue | — | — | — | 3.7x–9.4x | $8.75–$21.50 |
Estimated fee of approximately $28.0 million, $2.0 million payable upon delivery of the opinion and the remainder contingent upon consummation of the Transactions. In the two years preceding the opinion, J.P. Morgan received approximately $80,000 in fees from the Company and approximately $12 million from Roche.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
|---|---|---|---|---|---|---|
| Revenue | $242M | $293M | $362M | $420M | $472M | 18.2% |
| Revenue growth | 15.4% | 21.0% | 23.5% | 16.3% | 12.3% | |
| EBITDA | $40.1M | $71.0M | $103M | $130M | $148M | 38.7% |
| EBITDA growth | 169.1% | 77.1% | 44.9% | 26.0% | 14.3% | |
| EBITDA margin | 17% | 24% | 28% | 31% | 31% | |
| Implied EV / EBITDA | 44.9x | 25.4x | 17.5x | 13.9x | 12.1x |
Year-1 growth is against LTM at announcement ($210M revenue, $14.9M EBITDA); later years are year over year.
Management prepared risk-adjusted standalone projections for calendar years 2021 through 2030, which were provided to the Board and J.P. Morgan and used in its analyses. Total revenue grows from $209.6 million in 2021 to $682.8 million in 2030, with EBITDA of $14.9 million in 2021 rising to $239.5 million in 2030 and operating profit from $4.2 million to $217.2 million. The projections were not provided to Roche or Merger Sub.
Process notes
Other Diagnostics / Life Sciences fairness opinions
- Luminex / DiaSorin 2021 · 22.2x EV/EBITDA
- Meridian Bioscience / SD Biosensor / SJL Partners 2022 · 17.6x EV/EBITDA
- Olink Holding AB / Thermo Fisher Scientific 2023 · 591.4x EV/EBITDA
- Abcam / Danaher 2023 · 29.1x EV/EBITDA
- Chembio Diagnostics / Biosynex SA 2023
- Genomic Health / Exact Sciences 2019 · 32.2x EV/EBITDA
All Diagnostics / Life Sciences opinions → · J.P. Morgan opinions