|Trends & Perspectives|
GE Healthcare (Chalfont St. Giles, UK) reached an agreement on the terms to acquire Whatman plc (Kent, UK). Under the terms of the transaction, each Whatman shareholder will receive 270 pence in cash for each Whatman share, putting the total value of the purchase at approximately $713 million. The agreement is subject to approval by Whatman's shareholders and customary regulatory approvals.
According to GE officials, one of the reasons for this acquisition is that Whatman fits in well with GE's strategies and product lines.
“We have focused to build our business around sample prep, such as protein as well as DNA sample prep,” said Peter Ehrenheim, president and chief executive officer of GE Healthcare's life sciences business. “Since we don't have a lab filtration franchise at the moment, in that sense, Whatman fits in well for us. On top of that, they have a sample collection technology that is quite interesting, and we feel that we can continue to develop that.”
Ehrenheim added that, “We want to grow our business by leveraging Whatman's platform in filtration. With some of our franchises in chromatography and some of our system platforms, we think we could grow those businesses faster than just being stand-alone. In addition, their sample collection technology is an opportunity for us to open up a different market.”
Even though Whatman has been a supplier to the IVD industry, Ehrenheim clarified that the acquisition of Whatman should not be interpreted as a sign of GE getting more involved in IVDs.
“Whatman probably has quite a big footprint, maybe a little bit bigger than what we currently have today in our life sciences business, in selling things to diagnostic companies, such as components,” said Ehrenheim. “That's something that we believe is interesting to build on. But this transaction does not constitute any real movement into the in vitro space in any way. It more likely strengthens our position in the life sciences tools space, and then maybe strengthens our position as a supplier to the IVD industry.”
Industry analysts agree that while acquiring Whatman will benefit GE's life sciences business, it will not alter its current involvement in IVDs.
“Whatman expands GE's life sciences offerings, but it will have little strategic impact on GE,” said Manfred Scholz, PhD, president of Scholz Consulting Partners (Medford, MA). “Whatman is a good company, but I don't think that GE's diagnostics segment will benefit a lot from this acquisition. If anything, GE's acquisition of Whatman is likely to be accretive and certainly adds a little to the top line. But it doesn't seem to have a major strategic impact. Filtration as a part of sample-preparation methods is important, but it is not a strategic acquisition gem.”
Last year, GE made major headlines when it terminated its $8.1 billion merger agreement to acquire the primary IVD and point-of-care diagnostics businesses of Abbott (Abbott Park, IL) (see IVD Technology Trends & Perspectives, September 2007, page 14). The two companies were unable to agree on final terms and conditions of the proposed sale.
In addition to the complexity of the transaction, one of the key issues was that even if the transaction had closed, there would have been in place a number of transition services agreements between the companies for many years to come. As the negotiations progressed and got closer to the close date, the number of the transition services agreements increased, and it became clear this would be an ongoing, long-term relationship and issue. The companies could not come to a final agreement on the terms that would surround the provision of those services.
GE Healthcare officials declined to comment on whether the company plans to get more involved in IVDs. However, analysts believe that while GE is still interested in IVDs, its focus may have shifted.
“I believe there is still a lot of interest in acquiring and expanding in IVDs at GE,” said Scholz. “However, the focus at GE seems to be more on pharmaceutical companion markers than acquiring a large-scale IVD business. GE seems to have a bias toward drug discovery and development–related technologies, rather than traditional IVDs. So I don't think there will be an Abbott-like acquisition by GE any time soon. Acquisitions by GE are always driven by financial considerations, especially growth and margin.”
Accordingly, GE Global Research (Niskayuna, NY), GE's centralized research and development organization, and Eli Lilly and Co. (Indianapolis) recently signed a three-year collaborative research agreement to discover and develop IVD assays that may predict cancer treatment response to targeted therapies (see IVD Technology Trends & Perspectives, January/February 2008, page 11). Under this agreement, GE is developing multiplexed tissue-based assays and image analysis tools that can measure multiple biological pathways. The goal of this collaboration is to discover protein and gene signatures that will predict the likelihood that a medication will be effective in treating certain cancers.