Beckman Stock Rises Amid Sale Rumors
Shares of medical instruments maker Beckman Coulter Inc. jumped as much as 10% during trading Wednesday on rumors that it is one of several companies being courted by the diagnostics unit of German medical-industrial conglomerate Bayer.
The Fullerton firm, which would not comment on a possible sale, fanned rumors by shelving a public offering of debt securities it had announced last week. Beckman said market conditions were not favorable for the offering.
The company’s stock rose as much as $3.70 a share to $41.20 during trading before settling back to close at $40.01 a share, up $2.51 on the New York Stock Exchange.
“Investors are putting two and two together,” said Lehman Bros. analyst David Gruber, who believes there’s a 50-50 chance that Bayer will acquire Beckman.
The industry has been consolidating, and Bayer is believed to be interested in other candidates, including closely held Dade Behring Inc. in Deerfield, Ill.
The rumors began after Bayer’s diagnostics unit said it planned to announce today “a significant transaction that will impact [our] product offerings worldwide.”
Amy Samaha, a spokeswoman for Bayer’s diagnostics business unit, based in Tarrytown, N.Y., declined to comment.
Seven companies account for about 70% of the diagnostics market, Gruber said, and the number of players in the industry will shrink as market leaders like Roche Holding, Abbott Laboratories and Bayer snap up smaller competitors.
Bayer, which invented aspirin, also sells chemicals, polymers and products such as pesticides. Its medical business has become more interested in diagnostics, analysts said, and may want to buy a rival to keep up with industry leader Roche. In 1998, Bayer bought the diagnostics unit of Chiron Corp. for $1.1 billion.
Beckman’s strong position in blood testing, clinical diagnostics and lab automation equipment makes it an attractive takeover target, Gruber said. Its growing life-sciences division, which makes instruments used by pharmaceutical companies and others to develop new drugs, adds to its allure.
So does Beckman’s “undervalued” stock, he said. Wednesday’s price jump still left the stock below the 52-week high it hit Jan. 3 of $43 a share. Gruber, who rates the stock a strong buy, predicts the stock will hit $50 a share.
Robert Hopkins, an analyst with Credit Suisse First Boston, said he thought Bayer was more likely to acquire Dade than Beckman because Dade has been using an investment banker to explore financial arrangements, including a possible sale.
Beckman reported first-quarter net income of $20.3 million, or 32 cents a share, which included a charge of $3.1 million for an accounting change.
A year earlier, the company earned $21 million, or 35 cents a share. Sales declined slightly to $432.7 million.
