One of Britain’s leading developers of medical diagnostic kits faces a battle to hang on to its independence after rebuffing a £230 million approach from a larger US rival.
Axis-Shield, which makes equipment used by doctors to test for flu and diabetes, snubbed Alere’s 460p-a-share cash proposal, saying that it “fundamentally undervalues” its prospects.
News of the offer lifted Axis-Shield’s shares by 50 per cent to 500p as analysts suggested that American firms such as Roche or Abbott Laboratories, or even the German electronics company Siemens, could make competing bids.
Axis-Shield’s advisers said that the offer was opportunistic, given that it bounced back from a profit warning last year. The company was created through a merger in 1999 between the Norwegian Axis Group and the Scottish Shield Diagnostics, a hi-tech healthcare business established at Dundee University and spun out in 1982. It makes tests for rheumatoid arthritis and for low levels of vitamin B12, a risk factor in the development of Alzheimer’s disease.
Its most valuable product is Afinion, a machine roughly the size of a shoebox that can assess a blood sample within minutes and is used in doctors’ surgeries to test for diabetes or to distinguish between colds and flu, which could cut down on unnecessary prescriptions of antibiotics.
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More than 10,000 kits are in use and the product is being scrutinised by regulators in the United States for a potentially lucrative additional use — testing lipid levels, which diagnose highcholesterol conditions.
Julie Simmonds, a healthcare analyst at Collins Stewart, said that Afinion could benefit from the marketing muscle provided by a larger multinational corporation. “As with most healthcare or medical devices companies, there comes a time when the business might be worth more to a larger player than the stock market will ever value it,” she said.
Alere, based in Massachusetts, has 11,000 employees in 25 countries, including 200 staff at seven sites in Britain. Its products include tests for drug abuse and infectious diseases and SureStep pregnancy tests. Alere approached Axis-Shield last month and, after making its offer public yesterday, indicated that it was keen to negotiate, saying it would “welcome the opportunity to discuss a possible transaction in a constructive manner”.
Collins Stewart suggested that a price of 550p to 600p per share would be appropriate. Another analyst, Sebastien Jantet at Investec, opted for 530p and said: “This is a clear indication from Alere that they’d like to buy the business. There are sure to be others interested.”
Axis-Shield has 550 staff and made a £7.5 million profit from sales of £101 million last year.