Opko Health, the U.S. drug-development company traded on the Tel Aviv Stock Exchange, said yesterday it had agreed to buy clinical laboratory operator Bio-Reference Laboratories in a stock deal valued at $1.47 billion to bolster its diagnostics business.
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OPKO offered 2.75 of its shares for each share of Bio-Reference, or $52.58 based on Opko’s Wednesday close, the companies said in a statement. Opko’s stock price, which had been up some 90% this year through Wednesday, provided the currency for the deal.
The offer represented a premium of about 60% to Bio-Reference’s Wednesday close. Opko’s $7.8 billion market cap is much bigger than Bio-Reference’s, but the latter has more than eight times the annual revenue of Opko and, unlike Opko, is profitable.
Bio-Reference’s shares jumped to a record high of $46.74 in early trading yesterday, before paring some gains to trade at $44.69. But shares of Opko Health, which has diagnostics and drugs making businesses, closed down 6% on the TASE to end at 68.40 shekels ($17.83) and in New York they were down a sharper 11.7% at $16.89 by early afternoon local time.
Bio-Reference Laboratories is the third-largest full service clinical laboratory in the United States. Opko said it would use Bio-Reference’s sales and distribution network to boost sales of its 4Kscore test, which assesses the risk of aggressive prostate cancer, as well as other OPKO diagnostic products under development and license, or sell genetic and gene-sequencing data collected by the company.
“Bio-Reference Laboratories is a true success story that has culminated in cutting-edge diagnostic solutions accompanied by a worldwide franchise in the diagnosis of rare diseases,” said Opko Chairman Phillip Frost, who had been chairman of Teva Pharmaceuticals before leaving in February amid criticism over his management style.
J.P. Morgan is the financial adviser to OpkoHealth, while Greenberg Traurig PA is the legal adviser. Allen & Company acted as financial adviser to Bio-Reference, while Davis Polk & Wardwell was its legal adviser.