Opko Health Inc (NYSE:OPK) made a deal today to acquire the third largest full service clinical laboratory in Bio-Reference Laboratories Inc (NASDAQ:BRLI) for a reported $1.47 billion in stock. The two companies expect the transaction occur during the latter half of this year.
In the deal, which has been approved by the Board of Directors of both companies, holders of Bio-Reference Laboratories will receive 2.75 shares of Opko stock for every one share owned of Bio-Reference Laboratories. Based off of the stock price of Opko at closing June 3rd of $19.12 per share, the transaction is worth around $1.47 Billion, or $52.58 per share of Bio-Reference Stock. With these numbers, Opko bought Bio-Reference at a 60% premium.
In wake of becoming a part of Opko, Bio-Reference Stock surged to $39.60, while on the other hand Opko dropped to $16.25, a 15% slump on the day for Opko.
Opko intends to allow laboratory operations to continue seamlessly, but will be enhancing operations with their diagnostic products. Bio-Reference Laboratories national prominence will give Opko’s diagnostic services valuable distribution capabilities. The combination of Opko’s products and Bio-Reference’s national marketing, sales, and distribution resources is something that Opko is hoping will increase their overall success and value.
Clearly, investors aren’t a big fan of the transaction as evidenced by the crumbling stock price for OPK. Investors should note that OPK is currently a Zacks Rank #3 (Hold) and it has an ‘F’ score for valuation so let’s hope that the BRLI purchase can turn around Opko Health’s prospects in the near term.