After a blockbuster two years bolstered by sales of its multiple COVID-19 diagnostics, Quidel is looking for a way to reinvest that windfall back into the business—and seems to have found it in the purchase of fellow test maker Ortho Clinical Diagnostics.
The duo announced the intent to combine Dec. 23, with the goal of broadening Quidel’s footprint among the global testing industry. Together, Quidel and Ortho have more than a century of experience in diagnostics, having pioneered the development of tests for COVID-19, the flu, HIV and more.
The acquisition is expected to be completed sometime in the first half of 2022. It’ll see Quidel put down $24.68 in cash and shares for each share of Ortho’s common stock, adding up to a total equity value of about $6 billion, with $1.75 billion of that paid out in cash. The combined company will also take on Ortho’s $2 billion in net debt.
“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,” Ortho CEO Chris Smith said in a statement.
The buying price marks a 25% bump over Ortho’s closing price on its last full day of trading before the acquisition was announced, when it clocked in at $19.79. The stock proceeded to surge in the days after the deal was laid out, reaching a high of $21.28 the morning of the announcement.
Conversely, the transaction struck a significant blow to the buyer. After climbing to $180 in the days before unveiling the acquisition—its highest point since February—Quidel’s stock sank to $140 when the market opened Dec. 23 and has continued its downward trajectory ever since.
Still, Quidel is predicting that the merger will ultimately serve as a boon to its bottom line. Within three years of closing the deal, the combined company is expected to cut about $90 million in overlapping costs, while herding in additional revenues of more than $100 million.
“Establishing a stronger leadership position, we expect the combined company will emerge as a global player with top-tier R&D capabilities, a more diverse product pipeline and broader geographic footprint,” said Douglas Bryant, Quidel’s president and CEO, who will serve as chairman and CEO of the combined company. “We are impressed by what Ortho has accomplished for patients.”
It’s been a busy few years for Quidel and Ortho, both of which moved quickly to apply their decades of test-making experience to the COVID-19 pandemic. Each company achieved firsts in that realm, with Quidel scoring the FDA’s initial emergency use authorization to bring a rapid antigen test for the coronavirus to the U.S. and Ortho landing the agency’s first nod for high-volume antibody and antigen tests for the virus.
This year also marked Ortho’s public debut, more than 80 years after its founding. The company began trading on the Nasdaq under the ticker symbol “OCDX” in late January in an initial public offering that aimed to rake in nearly $1.5 billion.