Dangling a higher offer, a group of former Affymetrix employees is trying to scuttle Thermo Fisher Scientific’s planned $1.3 billion acquisition of the genetic analysis firm.
Affymetrix’s board rejected a $1.5 billion bid the former employees made on March 18. But now that the offer has risen to $1.6 billion, the board has agreed to consider it and has postponed a shareholder meeting to vote on Thermo Fisher’s deal from March 24 to March 31.
“Our offer presents a compelling opportunity for Affymetrix’s 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.
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 says Origin is ready to pay up to $100 million to cover termination fees for which Affymetrix would be liable if it backs out of the Thermo Fisher deal.
Though Affymetrix’s board had characterized Origin as “a newly formed shell entity with no assets” when it turned down the employees’ first offer, it is no longer being so dismissive. The board now says it “has a duty to engage with Origin on its merger proposal.”
When Thermo Fisher announced its deal in January, 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, which he hasn’t raised, is still the best. “We fully expect that the Affymetrix board of directors will promptly conclude that our transaction remains the only bona fide proposal available,” he says. Casper suggests that an Origin deal would face delays because of heightened U.S. government scrutiny of Chinese investments in U.S. firms.
Eric Criscuolo, a stock analyst with Mizuho Securities, doesn’t expect Thermo Fisher will raise its offer. Origin’s “murky” financing details and potential U.S. government opposition to the Chinese funding “may keep Thermo as the best and only option,” he writes in a note to clients.