Quidel Corporation Signs Definitive Agreement To Acquire Ortho Clinical Diagnostics

Strategic, transformational acquisition advances Quidel’s global leadership in diagnostics

Quidel Corporation and Ortho Clinical Diagnostics Holdings plc announced that they have entered into a definitive agreement in which Quidel will acquire Ortho, one of the world’s largest in vitro diagnostics companies, for $24.68 per share of common stock using a combination of cash and newly issued shares in the combined company, representing a 25% premium over Ortho’s closing price on December 22, 2021 and an equity value of approximately $6.0 billion. The transaction is expected to close during the first half of fiscal year 2022, subject to customary closing conditions.

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“The combination with Ortho will help solidify Quidel as a leader in the diagnostics industry, bringing together innovative, complementary products, solutions, and services that enhance the health and well-being of patients across the globe,” said Douglas Bryant, President and Chief Executive Officer of Quidel, who will serve as Chairman and Chief Executive Officer of the combined company. “Establishing a stronger leadership position, we expect the combined company will emerge as a global player with top-tier R&D capabilities, a more diverse product pipeline, and broader geographic footprint. Importantly, our complementary cultures are underpinned by a commitment to our customers, patients, and the communities we serve, reinforcing our confidence in the long-term value creation of this transaction. We are impressed by what Ortho has accomplished for patients. We look forward to joining together to continue the strong patient focus that is core to our mission, creating an organization with a shared goal of discovering, developing, and delivering innovative solutions to our customers.”

“Quidel shares our commitment to customers and passion for the patients we serve. By bringing together Quidel’s point-of-care diagnostics with Ortho’s vast global reach, there is a substantial opportunity to capitalize on the cross-selling opportunities, move into attractive adjacent markets, and accelerate innovative product expansion and the development of molecular technologies,” said Chris Smith, Chairman and Chief Executive Officer of Ortho. “Together, we will continue to advance life-changing diagnostic solutions to improve patient outcomes and deliver economic benefits to the healthcare system.”

The combined organization will unite world-class technologies and platforms to benefit customers with expanded access to clinical chemistry, immunoassay, molecular diagnostics, immunohematology, donor screening, and point-of-care diagnostics offerings. Further, the combined company will be poised to meet patient testing needs at all points of the care continuum – reference labs, hospitals, physicians’ offices, urgent care centers and at-home / retail locations. With complementary areas of focus, the combined company will also operate with global reach and scale, maintaining the speed and agility that is fundamental to enhance Quidel’s current strategic approach.

Transaction Benefits

• Balanced and diversified product portfolio across diagnostic instruments and assays. The companies’ highly complementary, world-class product and service offerings provide opportunities to capture significant growth globally while enhancing cross-selling opportunities across a diversified customer and channel mix. The transaction provides Quidel with ample whitespace opportunity to capture demand in emerging markets through telehealth technology and digital health capabilities, utilizing Ortho’s strong customer relationships and providing greater patient access to point-of-care diagnostic products.

• Highly synergistic opportunities create significant shareholder value creation. The transaction is expected to generate substantial synergies on both the top- and bottom-line. Quidel anticipates that the combined company will realize approximately $90 million of run-rate cost-related synergies, excluding one-time costs, by the end of year three, driven primarily from operational efficiencies, supply chain optimization, and shared administrative functions, including public company costs. In addition, given Ortho’s enhanced global commercial reach and expansive product portfolio, Quidel expects to drive strong cross-selling revenue synergies in excess of $100 million by 2025 and meaningful adjusted EBITDA benefits.

• Complementary cultures with a commitment to providing world-class products and services. Both Quidel and Ortho have talented and experienced employees who share a commitment to customers, patients, and the communities the companies serve. This combination is expected to benefit patients, customers, and suppliers, and provide greater opportunities for the approximately 6,000 employees of both companies.

• Robust, more diverse product pipeline and enhanced R&D capabilities. The transaction is expected to accelerate an innovative pipeline and milestone execution through complementary capabilities and product development synergies. The combined product portfolio, supported by an established global commercial infrastructure and distribution footprint, positions Quidel to capitalize on strong secular growth drivers.

• Strong balance sheet with significant cash generation. After accounting for financing of the transaction, the combined company has a pro forma net debt-to-adjusted EBITDA of less than two-times as of TTM third quarter 2021. Expected strong operating cash flow and margin enhancement opportunities will enable Quidel to pursue organic and inorganic growth.

Transaction Details

Under the terms of the agreement, which was unanimously approved by the Board of Directors of each company, Quidel will acquire Ortho for $24.68 per share of common stock, for a total consideration of approximately $6.0 billion, including $1.75 billion of cash, funded through cash on the balance sheet and incremental borrowings. The combined company will also acquire Ortho’s existing net debt of $2.0 billion.

Ortho shareholders will receive $7.14 in cash per common share and 0.1055 shares of common stock in the combined company for each Ortho common share, with Ortho shareholders expected to own approximately 38% of the combined company. This represents an implied premium of 25% when compared to Ortho’s unaffected closing stock price on December 22, 2021.

Following the close of the transaction, the combined company’s Board of Directors will consist of 12 members, eight (8) designated by Quidel and four (4) designated by Ortho. Quidel’s current President and Chief Executive Officer, Douglas Bryant, will serve as Chairman and Chief Executive Officer of the combined company. Joseph M. Busky will be the Chief Financial Officer, Robert Bujarski will be President and Chief Operating Officer, and Michael Iskra will be Chief Commercial Officer.

The transaction, which is subject to approval by both companies’ shareholders as well as customary closing conditions and regulatory approvals, is expected to close in the first half of 2022.

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