Roche Holding AG has joined the bidding for Life Technologies Corp and hired bankers to advise on a potential deal, while buyout firms KKR & Co LP and Hellman & Friedman LLC have teamed up to explore a joint bid, people familiar with the matter said.
Roche's interest in Life Tech, a biomedical laboratory equipment maker with an $11 billion market value, signals the Swiss drugmaker's continued interest in gene sequencing a year after its $6.8 billion hostile offer for Illumina Inc failed over price.
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Life Tech shares, which were down 1 percent before the news, were up 2 percent at $64.21 on Tuesday afternoon. They are up more than 30 percent since the start of the year on hopes that the company's exploration of strategic alternatives will lead to a sale.
The potential bidders are joining what is turning out to be a competitive auction, as cheap financing and growing confidence about the U.S. economy prompt more companies and private equity firms to contemplate deals costing more than $10 billion.
Thermo Fisher Scientific Inc , Danaher Corp and a buyout consortium comprising Blackstone Group LP , Carlyle Group LP , TPG Capital LP and Singapore's state investor Temasek Holdings are among the parties weighing bids, Reuters previously reported.
Bids are due in early April, said the people, who asked not to be named because details of the auction are not public.
Representatives for KKR, Hellman & Friedman and Life Tech declined to comment. Roche said it does not comment on market speculation.
Roche walked away from an offer for Illumina in April 2012 after shareholders blocked its move to gain seats on the U.S. firm's board.
Healthcare companies have now been attracted to Life Tech by the scale and synergies that a tie-up could bring while private equity firms have found the Carlsbad, California-based company's reliable cash flow appealing.
Analysts see a good fit between the laboratory equipment and scientific instrument businesses of Thermo Fisher and Life Technologies, with the exception of Life Tech's genetic sequencing, which Thermo Fisher could choose to divest after a deal.
Industrial and healthcare conglomerate Danaher, which has a life sciences and diagnostics division, agreed to buy Life Tech's stake in a mass spectrometry joint venture with MDS Analytical Technologies for $450 million in cash in 2009.
Private equity firms have tried to compete in the auction by teaming up, a move that helps them reduce the size of their individual equity commitment but does not improve their returns.
So-called club deals, in which private equity firms team up, have become less popular in recent years over concerns about corporate governance in acquired companies and a backlash from some fund investors who see little point in having exposure to a company through more than one buyout fund.
People close to the Life Tech sale process said buyout firms could struggle to achieve internal rates of return of 15 percent or more on the deal based on the leverage Life Technologies could take on to capture a sufficient portion of the financing market in a transaction.
(Reporting by Soyoung Kim and Greg Roumeliotis in New York; editing by Gerald E. McCormick and Matthew Lewis)