Tuesday, June 07, 2011

My Take on Gen-Probe

The auction for Gen-Probe has ended and everyone knows that Novartis is the only bidder left after Thermo Fisher and Life Technologies dropped out. I never thought Thermo Fisher was serious in this bidding after their purchase of Phadia, but I thought that Life Technologies was going to make a serious run for Gen-Probe. Life Technologies is in a relatively slow growing mature business and needs to grow their earnings at a faster clip. The Gen-Probe acquisition could have provided a nice fast growing business for them. People are now speculating that Novartis will simply just walk away. I don’t think they will… Of course if you are the only bidder, you don’t want to bid against yourself, but they understand the Gen-Probe business very well. This is an opportune time to acquire Gen-Probe as the company is about to transition into a new product cycle and should see a nice boost in earnings in the coming years. I’ve seen reports of 18% eps growth for 2012 and 20% thereafter. I can see an offer up to $85 for Gen-Probe and I would consider that a bargain for the acquirer. I guess we’ll see soon…


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