Activist Elliott Builds Big Stake in Life-Science Tools Supplier Bio-Rad
Elliott also has a stake in German lab-equipment supplier Sartorius, where Bio-Rad is also an investor
Activist Elliott Investment Management has built a sizable stake in Bio-Rad Laboratories BIO 0.51%increase; green up pointing triangle and plans to push the supplier of life-science tools and diagnostics products to boost its underperforming stock price, according to people familiar with the matter.
The details
Elliott is also a large investor in Sartorius SRT -3.06%decrease; red down pointing triangle, the German supplier of pharmaceutical and laboratory equipment that Bio-Rad has a strategic investment in, the people said. Sartorius serves makers of biologic drugs, which now dominate pharmaceuticals.
Bio-Rad’s investment in Sartorius is worth around $5 billion, not far from the size of Bio-Rad’s roughly $6.6 billion market value. Elliott believes Sartorius is a high-quality business with strong growth prospects, the people familiar with the matter said.
The exact size of Elliott’s stake in Bio-Rad as well as details of its plans couldn’t be learned.
Bio-Rad’s stock has dropped over 70% since trading at peak levels of over $800 a share in late 2021, during the Covid-19 pandemic. Its sales and profit have fallen, and it has underperformed peers. The stock closed Friday at $247.53.
Bio-Rad’s turnaround prospects and the value of its stake in Sartorius alone could make it an appealing target to potential buyers.
The company’s management has been forecasting 2026 operating margins of between 10% and 12%, significantly lower than in recent years and below those of its peers, which can be more than 30%.
The context
Restructuring at some of the biggest pharmaceutical companies following the pandemic has challenged the industry for life-science tools and diagnostics products. Analysts see bright spots emerging, however, as biopharma companies spend more on research and development and dealmaking activity heats up.
Bio-Rad’s peers, including Thermo Fisher Scientific and Danaher, have spent tens of billions on acquisitions in recent years, while private-equity firms have also been more active. Blackstone and TPG last year struck a deal to acquire medical-diagnostics company Hologic for over $18 billion.
Hercules, Calif.-based Bio-Rad makes instruments and software used by hospitals, blood banks and medical laboratories. Its founding family holds majority voting power, which can make it harder for an activist to prompt change. However, Elliott has successfully taken on other controlled companies including Pinterest and data-center operator Switch.
Elliott, which manages around $80 billion in assets, has been active in the healthcare sector, with other recent investments including Charles River Laboratories—where it won board seats and management agreed to launch a strategic review before the CEO resigned—and contract drugmaker Catalent, which was sold.