Life Technologies might be on the market

Whether it is seeking a buyer, evaluating an acquisition offer or just looking to figure out how to best reconfigure its operations is unclear, but Life’s hiring of strategic advisors recently has tongues wagging mostly about a potential buyout

| 2 min read

Jeffrey Bouley

CARLSBAD, Calif.—Life, as they often say, is aboutchange. As it turns out, change may very well be in the works for Life, LifeTechnologies Corp., that is—possibly a change in ownership, based on recent actions bythe company.

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Jeffrey Bouley
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Specifically, Life reported Jan. 18 that it hadretained Deutsche Bank AG and Moelis & Co. "to assist in its annual strategicreview," though the company also made a point of noting that "The board ofdirectors has not decided on any specific course of action."

For many, this suggests that the board is likely strongly considering some very significant kind of action.

That led to a more than 9 percent jump in Life'sstock price as speculation began that the company might be seeking a buyer ormight be exploring options related to some tentative acquisition offer.

The Financial Post drove much of the speculationwith reporting—based on unnamed sources—that the advisers Life hired have approached atleast four private-equity firms to discuss the possibility of an acquisition ofLife. Reportedly, Life is looking for a price in the $65- to $75-pershare range.

Analyst Jon Wood of Jefferies & Co. wrote aboutthe potential for a leveraged buyout in a research note after the news broke, andindicated that $50 to $60 was much more likely, as he indicated a "Buy" ratingfor Life shares and predicted a $58 price target, making note of Life's "resilientand predictable revenue profile, highly scalable operating model, andextraordinary capital efficiency," though he also pointed out the "riskappetite" in the market is "more limited" than before the financial crisis hitin 2008 and 2009.

While he wasn't the bear to Wood's bull, WilliamQuirk of Piper Jaffray was more reserved as he wrote to investors that Lifemight be seeking a leveraged buyout, rating the shares "Neutral" and predictinga $45 price target. Quirk names GE, Roche and Thermo Fisher Scientific aspotential buyers, but noted that more than 40 percent of Life's revenues werefrom selling research consumable that are "slow growth," compared to othercompanies in the same market that specialize more in next-generation sequencingproducts that are faster growing.

Among the market-watchers, the most notable "bearish" one right now is probably ISIGroup, which wrote that Life's high debtlevels would make for a challenging leveraged buyout, predicting instead thatthe strategic advisers are more likely to be assisting in a restructuring orrecapitalization rather than facilitating a buyout.

Life Technologies might be on the market

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Jeffrey Bouley

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