2021 was been a storied year for mergers and acquisitions. Today, shares of Ortho Clinical Diagnostics (NASDAQ:OCDX) are soaring higher on news of a major acquisition. Quidel (NASDAQ:QDEL) will acquire the company for $24.68 per share in cash and newly issued shares. Furthermore, the transaction will be worth $6 billion in total.
Ortho operates as an in vitro diagnostics company. The company is “trusted by hospitals, hospital networks, blood banks and labs around the world,” and operates 40 distribution centers. During Q3, Ortho reported revenue of $523 million, up 14% year-over-year on a constant currency basis.
The buyout received praise from Ortho CEO Chris Smith:
“Quidel shares our commitment to customers and passion for the patients we serve. By bringing together Quidel’s point-of-care diagnostics with Ortho’s vast global reach, there is a substantial opportunity to capitalize on the cross-selling opportunities, move into attractive adjacent markets, and accelerate innovative product expansion and the development of molecular technologies.”
All eyes are on OCDX stock today, so let’s dive into the details of the acquisition.
OCDX Stock: What to Know About the Quidel Acquisition
- Quidel estimates that cost synergies as a result of the acquisition will reach $90 million by year three. Additionally, Quidel expects revenue synergies to exceed $100 million by 2025.
- Ortho has a global reach spanning over 130 countries. As a result, this will help expand Quidel’s target audience and increase exposure to new markets.
- Combined, the two companies will have 6,000 employees and a total addressable market (TAM) of $50 billion.
- Shareholders of OCDX stock will receive $7.14 in cash and 0.1055 shares of stock for every OCDX share owned. Therefore, OCDX shareholders will own roughly 38% of the combined company.
- Quidel CEO Douglas Bryant expects that the combined company “will emerge as a global player with top-tier R&D capabilities, a more diverse product pipeline, and broader geographic footprint.”
- Furthermore, the combined company will acquire Ortho’s existing debt of $2 billion.
- The transaction is subject to agreement from both company’s shareholders. If approved, the transaction will likely close during the first half of 2022.
- Post transaction, the combined company’s board of directors will consist of eight Quidel representatives and four Ortho representatives.
- Finally, shares of QDEL stock are down more than 17% as investors digest the effects of newly issued shares and a reduction of cash on the balance sheet.
On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.