Danaher Corporation has announced the acquisition of diagnostics company Cepheid for approximately $4 billion, its first major deal since separating its industrial business to concentrate on life sciences, diagnostics, and biomedical products last year.
Following its $13.8-billion acquisition of filtration and purification tech provider Pall Corporation in May 2015, Danaher, in July of this year, completed the spinoff of its test and measurement, industrial technologies, and petroleum platform segments into their own public company, Fortive Corp., reports the Wall Street Journal.
The deal gave Danaher the opportunity to become active on the M&A front, specifically with regard to its Life Science & Diagnostics business, according to its top executive.
"What you've seen us do in Life Sciences is continue to broaden our product offering over time and I think you'll continue to see us do that. We have had a bias and we continue to have a bias towards businesses with not only strong brands and significant installed bases, but installed bases that drive good, consistent recurring revenue and consumables growth," Danaher CEO Thomas Patrick Joyce told analysts during an earnings call in July.
Cepheid fit the bill: It has the largest global installed base of instruments and the broadest test menu available in molecular diagnostics, and generated annual revenues of $539 million in 2015, with double-digit year-on-year organic revenue growth and more than 75 percent of that revenue recurring, according to a news release about the acquisition.
"We expect Cepheid to be an excellent complement to our existing Diagnostics businesses and to expand our runway for growth across the platform. Cepheid's extensive installed base, test menu and innovative product offering contribute to its market leadership in molecular diagnostics and we expect it to strengthen our position in this high-growth segment," said Joyce.
Sunnyvale, Calif.-based Cepheid develops molecular systems, genetic tests, and testing for infectious disease, sexual health and virology, among other clinical applications, according to Fortune.
Danaher's GeneXpert System technology offers a complete menu of tests on a single, fully scalable, consolidated workstation. It automates and integrates sample preparation, nucleic acid amplification, and detection of the target sequence in simple or complex samples using real-time Polymerase Chain Reaction (PCR).
Cepheid will join Beckman Coulter, Leica Biosystems, and Radiometer as part of Danaher's $5 billion diagnostics unit.
The purchase of Cepheid is to be financed through a combination of cash and debt, and is expected to close by the end of the year.