PerkinElmer Acquires BioLegend While FTC Warns Against Non-Approved Mergers

M&A activity in the general healthcare sector has yet to rebound from COVID-19. However, while overall deal numbers remain below pre-pandemic historical averages, deal size has increased. According to financial consultant Kaufman Hall, there were only 14 health system M&A transactions in the second quarter of 2021; but revenue from those deals was $8.5 billion, the second highest total in five years.

PerkinElmer Closes $5.25 Billion BioLegend Acquisition

M&A in the diagnostics sector is following the same basic pattern. Perhaps the biggest story in the past two months was the announcement that one of the year’s biggest deals to date, PerkinElmer’s $5.25 billion acquisition of antibodies and reagents provider BioLegend, has closed. PerkinElmer has been aggressive on the M&A front, but this is the biggest acquisition in company history. With more than 700 employees and $380 million in expected revenues, addition of San Diego-based BioLegend establishes PerkinElmer’s presence in new segments of the life sciences market. The plan is to make BioLegend’s San Diego campus PerkinElmer’s global center of excellence for research reagent content development.

The acquisition makes PerkinElmer a “best in class preclinical, life sciences franchise that is uniquely positioned to empower our external powers to deliver truly legendary discoveries over the coming years,” according to company President and CEO Prahlad Singh in a statement. The combination creates a “true powerhouse that will have the skill to be able to accelerate scientific advancement and new product innovation across the company and around the world.”

FTC Sounds the Warning on Unapproved Mergers

Meanwhile, regulatory pressures cast a growing shadow on future deal making. Rocked by a “tidal wave” of premerger filings, the U.S. Federal Trade Commission (FTC) has been sending out letters warning that companies that merge without agency full agency review do so “at their own risk.” The FTC reportedly received 343 premerger filings in July, as compared to 112 in July 2020. The danger is that once the FTC does review the merger and determines that it’s anticompetitive, the merging companies will have to unwind the deal. There have already been over 2000 filings for the year (through early August), more than twice the 815 total filed in all of 2020.

The FTC announcement comes weeks after President Biden’s executive order instructing the FTC and other agencies to exercise additional scrutiny to limit anticompetitive M&A deals, including transactions involving hospitals and health systems.

Regulatory pushback is also coming from the other side of the Atlantic. In April 2021, the European Commission (EC) Directorate-General of Competition announced that it planned to review Illumina’s proposed $8.5 billion acquisition of former spinoff Grail. Rather than await the results of the EC investigation, Illumina closed the deal hoping to get regulatory approval later. In addition to the prospects of having to unwind the deal, Illumina now faces the risk of EC sanctions.

Here’s a summary of the key new M&A diagnostic deals announced or closed in October 2021:

MERGERS, ACQUISITIONS & ASSET SALES