Opko Health Inc. Acquired Bio-Reference Laboratories Inc, Shares Tumble 15%

The mergers and acquisitions related fever in the healthcare sector is showing no signs of a slow down as evident from the fact that even smaller companies are catching on to the craze. The latest to jump on the mergers and acquisitions bandwagon is OPKO Health Inc. (NYSE:OPK), which went on to buy out Bio-Reference Laboratories Inc (NASDAQ:BRLI) in an all stock deal worth $1.47 billion, valuing each Bio-Reference share at $52.58, at a premium of almost 60% to the company’s closing price as of the end of yesterday’s trading session.

The drugs and diagnostics company is aiming to tap into the genetic data and sequencing technologies through the acquisition. The transaction will provide OPKO with access to Bio-Reference’s genetics and genomics data, which could help the company clue in on personalized drug development. The deal transforms OPKO into a company that rakes in annual sales of over $900 million. The said acquisition also gives OPKO at least one unit to rely upon for profitability as it continues to ramp up spending on research and development on drug programs. Furthermore, OPKO will also be able to tap into Bio-Reference’s stable relationships with healthcare providers, including major health insurers, which could help the company accelerate commercialization plans for its 4Kscore blood test, which was launched in the market last year.

OPKO also said that the company plans to market its prostate cancer blood test with the help of Bio-Reference’s sales force. The company also has plans to either license or sell genetic and genomic sequencing data collected post the acquisition. The deal is expected to close in the second half of 2015.

OPKO’s Chairman, Phillip Frost, commented: “I have long admired Bio-Reference Laboratories which, for almost 30 years, has enjoyed an impressive record of organic growth through constant innovation and clinical awareness.” Bio-Reference Lab’s CEO, Marc Grodman also seemed satisfied with the deal commenting: “Over the years we have learned that diagnostics are integral to drug discovery.”

OPKO shareholders, however, do not seem to be too excited about the company’s acquisition decision as evident from the fact that the company’s shares have lost over 15% of their value in intra-day trading session to now be worth $16.16 apiece.

Bio-Reference shares, on the other hand, have jumped 21% so far during today’s trading session.

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