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Darmstadt, Germany-based Merck is taking a trip to the Twin Cities to buy Minnesota-based Bio-Techne. The $11.3 billion deal would be Merck’s biggest acquisition in more than 10 years as the drugmaker expands under new CEO Kai Beckmann.
Bio-Techne spiked nearly 20% Thursday on the Nasdaq, while Merck KGaA, which hails from Germany as opposed to the US’s Merck & Co., popped about 5%. (While the companies share a name and historical roots, they’ve been separate businesses since the early 20th century and are competitors.)
The acquisition would strengthen Merck’s foothold in life sciences, especially drug discovery and gene therapy. Merck, meanwhile, could give Bio-Techne the backing it needs to compete in a consolidating sector.
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David Seeks Leg Up From Goliath
The biotech sector surged during COVID-19, and Bio-Techne benefited, with its shares spiking throughout 2020 and peaking in 2021. Its focus on medical research and diagnostic tools positioned it to benefit from the pandemic. But as the world healed, capital pouring into life sciences dried up. Bio-Techne shares were sitting at less than half their 2021 record before yesterday’s boost.
Big Pharma is taking the opportunity to scoop up smaller players struggling to stay afloat in the less-liquid environment:
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Merck’s deal comes after activist investor Ananym Capital Management ramped up pressure last week on Bio-Techne to consider a sale to a pharma giant. Ananym argued it could leverage a larger peer’s resources to scale its sales faster and cheaper. Beckmann said the sale had been stewing for longer than that. Merck expects the tie-up to yield about $159 million in cost savings over three years.
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The Merck chief expects more consolidation to follow. That’s already been happening throughout the industry, with fellow biotech companies Thermo Fisher Scientific and Danaher spending billions to scoop up life sciences specialists earlier this year.
Buying Bio: Taking over Bio-Techne would expand Merck’s share of the life sciences market and its overall US footprint (it would be one of Minnesota’s largest-ever acquisitions). Bio-Techne could give Merck an edge in drug discovery with its vast catalog of proteins and antibodies used for research, as well as lab tools — a $27 billion market opportunity, according to Merck’s Life Sciences chief. Last year, Merck bought SpringWorks Therapeutics for $3.9 billion, making another inroad into a US market that Beckmann has called very attractive. But other companies aren’t sitting still in the meantime, with biotech mergers and acquisitions showing signs of building momentum this year.
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