MILAN (Reuters) -Shares in DiaSorin jumped as much as 10% on Monday after the Italian diagnostics group said it was buying U.S. rival Luminex Corp in a $1.8 billion all-cash deal that strengthens its molecular business.
The global coronavirus pandemic has fuelled rapid growth at the company’s molecular division, which accounted for 29% of 2020 sales.
The Luminex acquisition consolidates DiaSorin’s presence in the U.S. market and strengthens its position in molecular diagnostics to help offset an expected drop in demand for COVID-19 molecular tests as the vaccine rollout progresses.
The move follows a similar acquisition last month by Swiss pharma group Roche, which bought GenMark Diagnostics in a $1.8 billion deal to fill a testing portfolio gap.
Under the terms of the agreement unveiled on Sunday night, shareholders will receive $37 in cash for each Luminex share, not far from Friday’s closing price of $32.95.
DiaSorin said that represented a premium of 23% when calculated versus the unaffected closing price on Feb. 24, a day before rumours emerged about a potential sale.
Shares in the U.S. firm, which is a leader in fast-growing multiplexing molecular diagnostics technology, have gained 42.5% so far this year.
DiaSorin had flagged the potential acquisition earlier this year, with Chief Executive Carlo Rosa saying in March the group had the ambition to grow and was waiting for an opportunity to materialise.
“Luminex perfectly fits with our strategy to grow our positioning in the molecular diagnostics space, to broaden our presence in the U.S. and to create additional value through Life Science offerings,” Rosa said in Sunday’s statement.
Luminex will be merged with a newly formed U.S. subsidiary of DiaSorin. The combined group will have 2020 revenues of around $1.5 billion.
DiaSorin said it would fund the deal through a mix of cash and external financing and guided for an immediate positive impact on its earnings per share (EPS). Broker Equita estimated a 14% boost to DiaSorin’s 2022 EPS.
Broker Jefferies said the Luminex deal was reasonably priced at 17.5 times expected 2021 core profit, broadly in line with current trading multiples for global diagnostics peers.
By 0807 GMT shares in DiaSorin were up 8.1% at 150.9 euros each.
Additional reporting by Giulia Segreti and Valentina Za; Editing by Jan Harvey