Meridian Bioscience acquired by SD Biosensor / SJL Partners: fairness opinion by Rothschild & Co
Deal terms
Implied value per share by method vs. $34.00 offer
Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.
Opinion of Rothschild & Co to the target board
Discounted cash flow assumptions
Unlevered after-tax free cash flows discounted to present value as of May 31, 2022; midpoint of the range of estimated terminal values was $1.087 billion. Terminal period FCF calculated as NOPAT plus D&A less capex less change in NWC.
Selected public companies (8)
QIAGEN N.V. · bioMérieux SA · DiaSorin S.p.A. · Bio-Rad Laboratories, Inc. · Quidel Corporation · SD Biosensor, Inc. · Seegene, Inc. · OraSure Technologies, Inc.
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / 2022E Revenue | 0.4x | 2.1x | 6.6x | 2.3x–3.8x | $18.55–$29.95 |
| EV / 2023E Revenue | 0.5x | 2.8x | 6.4x | 2.8x–3.8x | $21.15–$28.40 |
| EV / 2022E EBITDA | 2.2x | 10.3x | 18.5x | 11.0x–13.5x | $26.10–$31.70 |
| EV / 2023E EBITDA | 3.6x | 11.8x | 18.7x | 11.5x–14.0x | $26.10–$31.50 |
Selected precedent transactions (20)
| Date | Target | Acquirer | Multiple |
|---|---|---|---|
| 2021-04 | Luminex | DiaSorin | 21.5x EV/LTM EBITDA |
| 2021-03 | GenMark Dx | Roche | 10.5x EV/LTM Revenue |
| 2020-11 | Horizon Discovery | PerkinElmer | 5.1x EV/LTM Revenue |
| 2019-02 | GE BioPharma | Danaher | 17.0x EV/NTM EBITDA |
| 2017-07 | Alere Triage Assets | Quidel | 3.0x EV/LTM Revenue |
| 2017-06 | EUROIMMUN | PerkinElmer | 22.5x EV/LTM EBITDA |
| 2016-12 | Hologic's Blood Screening Business | Grifols | 11.7x EV/LTM EBITDA |
| 2016-09 | Cepheid | Danaher | 7.0x EV/LTM Revenue |
| 2016-02 | Alere | Abbott | 22.4x EV/LTM EBITDA |
| 2015-11 | Mindray | Consortium led by Mr. Li Xiting | 12.8x EV/LTM EBITDA |
| 2014-01 | Ortho Clinical Dx | Carlyle | 8.5x EV/LTM EBITDA |
| 2013-09 | BioFire | bioMérieux | 6.4x EV/LTM Revenue |
| 2013-02 | HemoCue | Danaher | 13.0x EV/LTM EBITDA |
| 2012-07 | One Lambda | Thermo Fisher | 10.9x EV/LTM EBITDA |
| 2012-04 | Gen-Probe | Hologic | 20.4x EV/LTM EBITDA |
| 2011-07 | Immucor | TPG | 11.3x EV/LTM EBITDA |
| 2011-05 | Phadia | Thermo Fisher | 16.6x EV/LTM EBITDA |
| 2011-09 | Caliper Life Sciences | PerkinElmer | 4.1x EV/LTM Revenue |
| 2011-02 | Beckman Coulter | Danaher | 10.5x EV/LTM EBITDA |
| 2010-02 | Millipore | Merck KGaA | 17.0x EV/LTM EBITDA |
| Multiple | Low | Median | High | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / LTM Revenue | 1.8x | 4.9x | 10.5x | 3.5x–4.5x | $28.10–$35.75 |
| EV / LTM EBITDA | 8.5x | 13.0x | 22.5x | 13.5x–15.5x | $31.50–$35.90 |
| EV / NTM Revenue | 1.7x | 4.6x | 8.6x | 3.5x–4.5x | $26.35–$33.45 |
| EV / NTM EBITDA | 11.0x | 12.6x | 21.6x | 12.0x–14.5x | $26.75–$32.05 |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Historical trading prices / 52-week range (illustrative only) | Intraday price of Meridian common stock ranged from $17.04 to $31.93 in the 52-week period preceding July 5, 2022, with the $34.00 merger consideration representing a premium range of 6.5% to 99.5%. Closing price on March 17, 2022 (day prior to first SDB/SJL offer) was $25.67 (32.5% premium); closing price on June 6, 2022 was $27.92 (21.8% premium). VWAP premiums: 14.4% to 1-month VWAP of $29.72, 19.7% to 2-month VWAP of $28.41, 21.6% to 3-month VWAP of $27.95, 33.0% to 6-month VWAP of $25.57. | $17.04–$31.93 |
| Premiums paid analysis (illustrative only) | Premiums paid in selected precedent all-cash transactions involving U.S.-listed targets announced since 2018 with EV greater than $500 million. 1st-3rd quartile premiums: (i) 1-day prior 14.3%-52.2%, applied to $31.35 closing price on July 5, 2022 implying $35.85-$47.75; (ii) 20-trading-day average 18.2%-53.3%, applied to $29.03 implying $34.30-$44.50; (iii) 52-week high (7.8)%-20.3%, applied to $31.93 implying $29.45-$38.40. | $29.45–$47.75 |
Aggregate fee of approximately $22,200,000; $1,500,000 payable upon delivery of the opinion and the balance (approximately $20,700,000) contingent upon consummation of the merger. Expense reimbursement and indemnification also provided. Retained as financial advisor since December 2, 2019.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
|---|---|---|---|---|---|---|
| Revenue | $330M | $363M | $397M | $434M | $467M | 9.1% |
| Revenue growth | 9.3% | 10.0% | 9.4% | 9.3% | 7.6% | |
| EBITDA | $102M | $121M | $138M | $161M | $181M | 15.4% |
| EBITDA growth | 17.2% | 18.6% | 14.0% | 16.7% | 12.4% | |
| EBITDA margin | 31% | 33% | 35% | 37% | 39% | |
| Implied EV / EBITDA | 15.0x | 12.6x | 11.1x | 9.5x | 8.5x |
Year-1 growth is against LTM at announcement ($302M revenue, $87.0M EBITDA); later years are year over year.
Meridian management prepared "Preliminary Meridian projections" (made available March 5, 2022, covering FY2022E-FY2030E: total revenue $302M in 2022E growing to $585M in 2030E; Adj. EBITDA $87M to $242M) and "Updated Meridian projections" (made available April 5, 2022, covering FY2022E-FY2027E: total revenue $351M in 2022E, $326M in 2023E, rising to $469M in 2027E; Adj. EBITDA $108M in 2022E, $97M in 2023E, rising to $183M in 2027E). Rothschild & Co used the Updated Meridian projections, further adjusted for actual performance through June 30, 2022 (2022E revenue $346M, gross profit $202M, adj. EBITDA $102M). Unlevered free cash flow provided to Rothschild & Co was $12M for June-Sept 2022E rising to $122M in 2027E; management also estimated LTM EBITDA through May 31, 2022 of $101 million.
Process notes
Other Diagnostics / Life Sciences fairness opinions
- Olink Holding AB / Thermo Fisher Scientific 2023 · 591.4x EV/EBITDA
- Abcam / Danaher 2023 · 29.1x EV/EBITDA
- Chembio Diagnostics / Biosynex SA 2023
- GenMark Diagnostics / Roche 2021 · 120.8x EV/EBITDA
- Luminex / DiaSorin 2021 · 22.2x EV/EBITDA
- Exact Sciences / Abbott 2025 · 44.2x EV/EBITDA
All Diagnostics / Life Sciences opinions → · Rothschild & Co opinions