Fairness opinions › Diagnostics / Life Sciences › 2021

Luminex acquired by DiaSorin: fairness opinion by Perella Weinberg Partners

Announced April 12, 2021 · One-step merger · All cash · DEFM14A filed May 20, 2021

Diagnostics / Life Sciences Diagnostic Tools

Enterprise value

$1.8B

EV / LTM EBITDA

22.2x

EBITDA $81.0M · 17% margin

EV / LTM revenue

3.72x

revenue $484M

DCF discount rate

7.5%–8.5%

Perpetuity growth

Deal terms

ConsiderationAll cash

Price per share$37.00

Premium—

Premium basisUnaffected share price of $30.05 on February 24, 2021; last trading share price of $32.95 on April 9, 2021

StructureOne-step merger

Termination fee$59.2M (3.3% of equity)

Reverse termination fee—

Go-shopNone

Outside date—

FilingDEFM14A · EDGAR index

Implied value per share by method vs. $37.00 offer

Selected companies — EV / 2021E Revenue (Diagnostics peers) $25.47 – $39.62

Selected companies — EV / 2021E Revenue (Life Sciences peers) $25.47 – $39.62

Selected companies — EV / 2021E Adjusted EBITDA (Diagnostics peers) $21.52 – $30.26

Selected companies — EV / 2021E Adjusted EBITDA (Life Sciences peers) $21.52 – $30.26

Precedent transactions — EV / LTM Revenue $28.34 – $44.61

Precedent transactions — EV / LTM Adjusted EBITDA $27.48 – $31.75

Discounted cash flow $28.94 – $39.57

Historical Stock Trading (52-week range) $20.61 – $41.69

Equity Research Analyst Price Targets $22.00 – $48.00

Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.

Opinion of Perella Weinberg Partners to the target board

Delivered April 10, 2021 · Fee $29.7M ($27.7M contingent on closing), $2.0M on delivery of the opinion

Discounted cash flow assumptions

Discount rate7.5%–8.5%

BasisWACC derived via capital asset pricing model, taking into account target capital structure, cost of long-term debt, forecasted tax rate and predicted Barra beta

Terminal valuePerpetuity growth

Perpetuity growth2.5%–3.5%

Exit multiple—

Projection period2021E-2031E

Projections usedManagement Projections

Implied value per share$28.94–$39.57

Present value as of April 9, 2021 of standalone unlevered free cash flows for calendar years 2021-2031, treating stock-based compensation as a cash expense. Bridge to equity: added cash of ~$272 million, subtracted debt of ~$260 million, added net non-operating assets (Combinati investment) of ~$10 million; fully diluted shares based on 47.3 million shares outstanding, 0.5 million RSUs and 3.5 million options at weighted average exercise price of $21.37.

Selected public companies (13)

bioMérieux SA · GenMark Diagnostics, Inc. · Hologic, Inc. · OraSure Technologies, Inc. · PerkinElmer, Inc. · Qiagen N.V. · Quidel Corporation · Abcam plc · Bio-Rad Laboratories, Inc. · Bio-Techne Corporation · Bruker Corporation · Fluidigm Corporation · Meridian Bioscience, Inc.

Multiple	Peer low	Peer median	Peer high	Range applied	Implied per share
EV / 2021E Revenue (Diagnostics peers)	1.8x	4.1x	7.1x	2.5x–4.0x	$25.47–$39.62
EV / 2021E Revenue (Life Sciences peers)	2.2x	4.1x	17.5x	2.5x–4.0x	$25.47–$39.62
EV / 2021E Adjusted EBITDA (Diagnostics peers)	3.1x	12.5x	15.9x	12.5x–18.0x	$21.52–$30.26
EV / 2021E Adjusted EBITDA (Life Sciences peers)	9.7x	18.2x	45.6x	12.5x–18.0x	$21.52–$30.26

Selected precedent transactions (17)

Date	Target	Acquirer	Multiple
2021-02	GenMark Diagnostics, Inc.	Roche Holding Ltd	10.4x EV / LTM Revenue
2021-01	Oxford Immunotec Global PLC	PerkinElmer, Inc.	7.3x EV / LTM Revenue
2020-11	Horizon Discovery Group plc	PerkinElmer, Inc.	5.2x EV / LTM Revenue
2018-10	Merck KGaA—Flow Cytometry Business	The Company (Luminex Corporation)	1.7x EV / LTM Revenue
2017-06	EUROIMMUN US, Inc.	PerkinElmer, Inc.	5.0x EV / LTM Revenue
2017-01	Accriva Diagnostics	Werfen Life	4.0x EV / LTM Revenue
2016-09	Cepheid	Danaher Corporation	7.1x EV / LTM Revenue
2016-05	Nanosphere, Inc.	The Company (Luminex Corporation)	3.6x EV / LTM Revenue
2016-02	Alere Inc.	Abbott Laboratories	3.2x EV / LTM Revenue
2016-01	Affymetrix Inc.	Thermo Fisher Scientific Inc.	3.7x EV / LTM Revenue
2015-05	Pall Corporation	Danaher Corporation	4.9x EV / LTM Revenue
2013-09	BioFire Diagnostics, LLC	bioMérieux SA	6.9x EV / LTM Revenue
2012-07	One Lambda, Inc.	Thermo Fisher Scientific Inc.	5.1x EV / LTM Revenue
2012-04	Gen-Probe Incorporated	Hologic, Inc.	6.4x EV / LTM Revenue
2011-09	Caliper Life Sciences, Inc.	PerkinElmer, Inc.	4.1x EV / LTM Revenue
2011-05	Phadia AB	Thermo Fisher Scientific Inc.	6.7x EV / LTM Revenue
2010-02	Millipore Corporation	Merck KGaA	4.3x EV / LTM Revenue

Multiple	Low	Median	High	Range applied	Implied per share
EV / LTM Revenue	1.7x	5.0x	10.4x	3.3x–5.3x	$28.34–$44.61
EV / LTM Adjusted EBITDA	10.9x	20.3x	25.1x	18.0x–21.0x	$27.48–$31.75

Other analyses

Analysis	Summary	Implied per share
Historical Stock Trading (52-week range)	Closing prices of Common Stock on Nasdaq for the 52 weeks ended April 9, 2021 ranged from $20.61 to $41.69 per share; noted as reference data only, not part of the fairness analysis.	$20.61–$41.69
Equity Research Analyst Price Targets	Undiscounted price targets published by four equity research analysts as of April 9, 2021 ranged from $22.00 to $48.00 per share, with a median of $35.00; noted as reference data only.	$22.00–$48.00

$2,000,000 payable upon rendering of opinion (payable even if PWP had been unable to deliver an opinion), plus an additional fee currently estimated at approximately $27,713,482 contingent on consummation of the Merger. PWP received approximately $3.25 million from the Company for unrelated services in the prior two years; no compensation from Parent in that period.

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Management projections

Projection year	Year 1	Year 2	Year 3	Year 4	Year 5	CAGR
Revenue	$522M	$553M	$585M	$615M	$644M	5.4%
Revenue growth	7.9%	5.9%	5.8%	5.1%	4.7%
EBITDA	$96.0M	$117M	$131M	$144M	$152M	12.2%
EBITDA growth	18.5%	21.9%	12.0%	9.9%	5.6%
EBITDA margin	18%	21%	22%	23%	24%
Implied EV / EBITDA	18.8x	15.4x	13.7x	12.5x	11.8x

Year-1 growth is against LTM at announcement ($484M revenue, $81.0M EBITDA); later years are year over year.

Management prepared standalone unaudited Management Projections covering calendar years 2021E through 2031E (plus a terminal 2031E year), provided to the Board, Perella Weinberg and potential transaction counterparties including Parent. Revenue was projected to grow from $484 million in 2021E to $762 million in 2031E, with EBITDA rising from $81 million in 2021E to $185 million in 2031E. Unlevered free cash flow (NOPAT plus D&A, less capex and changes in working capital) was projected at $44 million in 2021E rising to $118 million in 2031E ($107 million in the terminal year).

Process notes

Single financial advisor (Perella Weinberg Partners) delivering an opinion to the Luminex Board on April 10, 2021 that the $37.00 per share cash consideration was fair from a financial point of view to holders of Common Stock. Deal was leaked: a Bloomberg News article on February 25, 2021 first reported Parent was considering an acquisition, so PWP used an "Unaffected Share Price" of $30.05 (Feb 24, 2021) alongside the $32.95 last trading price (April 9, 2021). Termination fee of $59.22 million represents approximately 3.25% of the purchase price; no go-shop. PWP's contingent fee (~$27.7 million) is more than 13x the $2 million opinion fee. Two Selected Transactions in the precedent set had Luminex itself as acquiror.

Other Diagnostics / Life Sciences fairness opinions

GenMark Diagnostics / Roche 2021 · 120.8x 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 → · Perella Weinberg Partners opinions