Cepheid (CPHD) Stock Exploding On DHR Acquisition


Cepheid (NASDAQ: CPHD) | Danaher Corporation (NYSE: DHR)

Cepheid is having an incredible day in the market today, and for good reason. Early this morning, the company announced that it has entered into a definitive acquisition agreement under which the company will be acquired. Today, we’ll talk about the details of the acquisition, what we saw from the stock as a result, and what we can expect to see from CPHD moving forward. So, let’s get right to it…

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CPHD Announces It Will Be Acquired By DHR

As mentioned above, Cepheid is having a strong day in the market today after announcing that it had entered into a definitive acquisition agreement. Under the agreement, Danaher will be acquiring all outstanding shares of the company’s common stock. In order to do so, they will be shelling out $53 per share, or a total of about $4 billion. At the end of the day, this is an incredible deal for CPHD, as it represents a premium of about 54%.

In a statement, John Bishop, CPHD CEO, had the following to offer with regard to the acquisition:

Cepheid’s vision has always been to enable as many people as possible to have access to powerful molecular diagnostic tests that provide critical information on a timely basis to guide treatment and patient management… As a standalone company for the last 20 years, Cepheid has been a leading innovator in molecular diagnostics, to date installing more than 11,000 GeneXpert Systems, and delivering tens of millions of tests spanning healthcare associated infections, critical infectious disease, sexual health, and virology.

Looking forward as part of Danaher and its $5 billion Diagnostic platform, we bellieve that Cepheid will be able to reach an extended level of customers and patients more quickly than we could have on a standalone basis… Our employees will have more options as part of a global science and tecnology company that shares Cepheid’s commitment to innovation, and also has the capability to help accelerate expansion of our global market position.”

How The Market Reacted To The News

As investors, one of the first things that we learn is that the news moves the market. Positive news leads to gains and negative news leads to declines. In the case of CPHD, the news that was released was overwhelmingly positive. After all, few things have the ability to get investors quite as excited as acquisitions. As a result, we’re seeing tremendous gains on the value of the stock today. Currently (11:33), the stock is trading at $52.25 per share after a gain of $17.83 per share (51.80%) thus far today. Unfortunately, DHR investors aren’t having such a positive reaction. Currently Danaher is trading at $79.73 per share after a loss of $1.46 per share (1.80%) thus far today.

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What We Can Expect To See Moving Forward

Moving forward, I have an overwhelmingly bullish opinion of what the combined company is going to be able to accomplish. At the end of the day, both CPHD and DHR are considered leaders in the diagnostics industry. By combining the two companies, we are left with a force that dominates the industry. All in all, I believe that this power play is a great move that will lead to long-run growth.

[Image Courtesy of Wikimedia]


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