Catalent surges over 20% on Danaher takeover interest, Wall Street mixed on deal

© Reuters.

By Investing.com Staff 

Shares of Catalent (NYSE:CTLT) surged 24% in pre-open trading Monday following a report over the weekend from Bloomberg News that Danaher (NYSE:DHR) has expressed interest in acquiring the contract manufacturer.

The initial offer from Danaher is said to value Catalent at a "significant premium" to the current market price, the report added citing people familiar with the matter. It is unclear if Catalent is open to the offer and a deal isn't imminent, it was added.

"As a matter of company policy, Catalent does not comment on market rumors or speculation," a representative said in an emailed statement to the news outlet.

Commenting on the speculation, Citi analysts have taken a "cautious stance" on a potential deal, citing strategic fit for Danaher and rationale, given investor focus on margin trajectory of deals. The analysts also highlighted prior commentary from Danaher's management indicating a services acquisition (CRO/CDMO) would be less likely due to the ability to effectively implement the DBS strategy.

"While investors have at times speculated that DHR could eventually make a foray into the services space, we believe the potential acquisition of CTLT would be viewed skeptically given the lower margin profile and lower cost synergy potential," they added.

BofA Securities analysts were a little more positive on the potential tie-up, saying: "[a]lthough DHR has said it was uninterested in pursuing services deals, at a high level, such a combination would make sense in our view, as the two companies operate in adjacent markets – DHR has a top position in supplying products used in biologic drug manufacturing, while CTLT has an expanding presence in contract biologics and cell & gene therapy (C>) services."

Shares of Danaher are down 0.7% in pre-open trading Monday following the report.