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Catalent partnered with AstraZeneca, and other Covid-19 vaccine makers during the pandemic.
AFP via Getty Images
Catalent
stock surged nearly 25% in premarket trading Monday following a report that life sciences company
Danaher
has expressed interest in taking over the contract drug maker.
Catalent
(ticker: CTLT) was the sharpest riser in premarket trading on the possibility of the interest leading to a potential deal. The interest by
Danaher
(DHR), shown in recent months, values Catalent at a “significant premium,” Bloomberg reported, citing people familiar with the matter. It is unclear whether Catalent is receptive to an offer, the report added, clarifying that a deal wasn’t imminent.
Barron’s tried to reach both Catalent and Danaher for comment early Monday.
“We think the deal makes near-term sense strategically and financially. But longer term we don’t know whether this is the best use of M&A capital for Danaher and question its ability to compete with Thermo [Fisher],” RBC Capital Markets analyst Conor McNamara said in a note Sunday.
He noted that
Thermo Fisher
(TMO) acquired Patheon—a contract development and manufacturing company, like Catalent—in 2017. If Danaher were to “follow the Thermo playbook” to become a one-stop-shop for biopharma, it would need to acquire a contact research organization, as Thermo did with its deal to buy PPD in 2021.
“But Thermo would have a five-plus-years head start and has a long history of integrating/cross-selling, which Danaher has never done,” he added.
Catalent, a contract manufacturer for pharmaceutical firms, formed partnerships with
Moderna
(MRNA),
AstraZeneca
(AZN) and
Johnson & Johnson
(JNJ) to scale up Covid-19 vaccine manufacturing during the pandemic.
M&A in the healthcare and life sciences industry slowed in 2022, with the number of deals down 30% and the average deal size down 15%, according to a report by management consulting firm Bain & Co. last week.
However, two deals announced in the fourth quarter “foreshadowed the possibility of a resumption in robust deal activity, it added.
Johnson & Johnson
announced a deal to acquire Abiomed for $16.6 billion in November, and a month later Amgen (AMGN) said it had agreed to buy Horizon Therapeutics for around $27.8 billion.
Catalent stock, which has climbed more than 24% so far in 2023 as of Friday’s close, pointed 24.9% higher ahead of the open Monday. In comparison, the S&P 500 has risen 7.7% over the same period. Shares in Danaher fell 2% in the premarket session.
Write to Callum Keown at callum.keown@barrons.com
