Former employees top Thermo Fisher offer for Affymetrix

A group of former Affymetrix employees hopes to scuttle Thermo Fisher Scientific’s planned $1.3 billion acquisition of the genetic analysis firm with an eleventh-hour $1.5 billion all-cash bid backed by a Chinese private equity firm. However, Affymetrix’ board has rejected the new deal.

“Our offer presents a compelling opportunity for Affymetrix’ stockholders to realize superior value through an attractive premium,” says Wei Zhou, president of Origin Technologies, a firm created by former Affymetrix employees to make the acquisition. Backing Origin’s offer is SummitView Capital, a China-based private equity firm that focuses on the semiconductor industry.

In a letter to Affymetrix Chief Executive Officer Frank Whitney, Origin’s Zhou says he would combine Affymetrix with Centrillion Technologies, a Palo Alto, Calif.-based gene characterization firm run by former Affymetrix employees. In addition, Zhou writes that Origin is ready to pay the $55 million termination fee for which Affymetrix would be liable.

In turning down the offer, Affymetrix’ board of directors says “Origin appears to be a newly formed shell entity with no assets of which Affymetrix is aware.” The board says it “continues to recommend to its shareholders the adoption of the merger agreement with Thermo Fisher.” Shareholders are scheduled to vote on March 24.

When it announced the deal in January, Thermo Fisher CEO Marc N. Casper said Affymetrix’s 1,100 employees and $350 million in annual sales would bolster his firm’s role in gene analysis. Thermo Fisher has sales of about $17 billion.

Casper is now arguing that Thermo Fisher’s offer is still the best. “Our agreement continues to represent the most compelling opportunity available for Affymetrix and its stockholders, and indeed, the only bona fide proposal available,” he says. Casper suggests that an Origin deal would face delays because of heightened U.S. government interest in Chinese investments in U.S. firms.

Analyst Dan Leonard of Leerink Research is betting Thermo Fisher will not only put up a good fight for Affymetrix but raise its bid if necessary. Thermo Fisher has the ability to “counter with a higher bid and still execute a deal that we would view favorably,” he wrote in a note to clients.