Korean diagnostics biotech goes transpacific, agreeing to shell out $1.5B to take Meridian private
A Korean diagnostics player that made millions of Covid-19 tests in the early stages of the pandemic is now expanding into the US market.
Cincinnati-based Meridian Bioscience put up notice Thursday morning that it’s going to be acquired by SD Biosensor, accompanied by investment firm SJL Partners for $1.53 billion in cash.
How the transaction will work, according to Meridian, is that a “newly formed affiliate vehicle” formed by SD Bio and SJL will acquire the company. In exchange, Meridian shareholders will receive $34 per share, a 32.4% premium over the company’s share price $VIVO when an offer was first made after market close on March 17. The biotech’s price at that time was $25.67 per share.
The deal is expected to close sometime in Q4 2022.
SD Biosensor chairman Young Shik Cho said in a statement that “We are pleased to be a family with Meridian Bioscience as a great partner for accelerating our entry into the U.S. IVD (in vitro diagnostics) market.”
SD Biosensor was the same company that Gingko Bioworks acquired its 50 million rapid antigen tests from in 2020.
Meridian, formed in 1976, sells diagnostic tests for different diseases, including Covid-19 — along with testing reagents.
As part of the merger agreement, the newly formed “vehicle” will get all of Meridian’s outstanding shares. And the transaction is not completely set in stone yet — while Meridian’s board has already agreed to the deal, the transaction is subject to a few more things. Those include approval by Meridian shareholders, receipt of required regulatory approvals, and the absence of specified “materially adverse outcomes” of Meridian’s previously disclosed and ongoing investigation by the DOJ, among others.
That DOJ investigation is around Meridian’s subsidiary, according to the company’s most recent 10-K with the SEC in November 2021. Back in 2018, Meridian’s subsidiary Magellan received a subpoena from the DOJ regarding its LeadCare product line — a blood test to detect lead poisoning. Last year, the department issued four more subpoenas — two for an ex-employee and a current employee to testify before a grand jury in H1, and two more for both witnesses and documents in H2. The investigation is still ongoing.
Once the transaction clears, Meridian noted that SDB will own approximately 60% and SJL will own approximately 40% of the company, which will no longer be traded or listed on a public exchange.
The release added that SDB and SJL plan “to operate Meridian as an independent entity following the completion of the transaction and the Company’s leadership team and headquarters are expected to remain in place.”
Analysts with William Blair noted that the offer was 4.5 times the last 12 months of Meridian’s sales. Noted in the report,
In terms of performance, Meridian has been a standout in a disastrous year for the sector (and broader market) with the stock up 65% year-to-date and up 52% over the last 12 months.Despite this, investor interest had been rather limited until the last couple of weeks when we started to receive a flurry on interest on the name with a focus on why the stock had been so strong.
Meridian declined to comment for this story. However, Meridian CEO Jack Kenny said in a release that “We are excited to announce this new chapter for Meridian after the many years spent transforming the Company for sustainable growth.”