Pall Corp (PLL) - Thermo Fischer Scientific (TMO) purchased Life Technologies (LIFE) in January 2013. Deal price was $76.00/share ($13.1B MC, $15.2B EV, 38% takeover price premium) and TTM multiples (including $275M synergies or 7.2% of $3.84B revs) were 11.0x EV/EBITDA ($1.38B) and 17.1x P/E ($4.56 EPS). The unaffected LIFE TTM valuations multiples (@ $55/share) were 10.5x EV/EBITDA ($1.11B, 29% margin) and 17.1x P/E ($3.21 EPS); existing debt leverage was 2.2x.
The PLL takeover price is reported to be $120/share ($12.8B MC, $13.9B EV); Danaher (DHR) is reported as the most likely acquirer with an all-cash price. Assuming 5%-7% synergies of 2016E $2.94B Revs ($145M-$205M range) at a 20% tax rate, a $120/share deal price (22% premium to prior 20 day $98.40 average closing price) implies takeover valuation multiples of 15.9x-14.9x EV/EBITDA ($874M-933M) and 22.5x-20.8x P/E ($5.34-$5.78 EPS). The unaffected PLL 2016E valuation multiples are 15.9x EV/EBITDA ($727M) and 23.3x P/E ($4.23 EPS); current debt leverage is 2.9x.
Life sciences companies are currently hot commodities which is reflected in the greatly increased standalone and deal valuation multiples between the LIFE/TMO deal and the potential PLL acquisition.
DHR is reported to be the leading contender as it can pay an all-cash deal consideration; TMO would likely have synergies with its LIFE acquisition but would need to have equity funding (either as part of the deal terms or issuing new stock) as it has almost $16B debt (~4x 2015E $4.17B EBITDA). DHR has a slightly larger MC than TMO ($59B vs. $51B) but only $3.4B debt; DHR with 2015E $4.77B EBITDA clearly has the capacity to lever its balance sheet to outbid TMO and a proven cost cutting culture, both which should contribute to an acquisition of PLL being highly cash EPS accretive (as reported earlier today).