Agilent to acquire Danish company Dako for $2.2 billion
by Jeffrey Bouley  |  Email the author


SANTA CLARA, Calif.—Taking a rather large stride in its strategic goals for the clinical diagnostics market, Agilent Technologies Inc. on May 17 announced the execution of a definitive agreement to acquire Glostrup, Denmark-based Dako, a cancer diagnostic company, for $2.2 billion on a debt-free basis.  
Agilent maintains that Dako will strategically complement Agilent's research technologies and will accelerate growth in rapidly expanding segments of diagnostic markets—and calls it the "next step in Agilent's growing role in clinical diagnostics." And a big step it is, with the all-cash transaction being the largest in Agilent's history.  
"Agilent's strategy in acquiring Dako is about strengthening the company's presence in life science and about revenue growth," said Agilent President and CEO Bill Sullivan in a news release, characterizing Dako as one of the world's leading providers of cancer diagnostics tools. "Dako employs extremely talented people with specialized expertise that we highly value. Their knowledge and experience will be very important as we move forward together. In the rapidly growing diagnostics market, Dako's products and capabilities are a strategic complement to Agilent's existing offerings."
Sullivan predicts that together, the combined companies will be able to develop a wider range of products to aid in the fight against cancer.  
"Like Agilent, Dako has a long history as a leader in scientific advancement and a culture that values discovery and innovation, said Lars Holmkvist, CEO of Dako, as he looked at complementary strengths possessed by the two companies. "We believe that Agilent and Dako are a winning combination."  
"This deal appears to make sense as Dako is considered an attractive asset in tissue diagnostics, a market with robust underlying fundamentals," wrote Doug Schenkel, an analyst at Cowen & Co., shortly after the announcement of the deal, adding that Agilent has some $3.9 billion in cash outside the United States and that money could be used for more life-science and diagnostic deals in other countries to avoid U.S. taxes.  
The acquisition is expected to close within the next 60 days, subject to the satisfaction of customary closing conditions, and Agilent expects the acquisition to be immediately accretive to corporate earnings on a non-GAAP basis.  
Dako provides antibodies, reagents, scientific instruments and software primarily to customers in pathology laboratories "to raise the standards for fast and accurate diagnostic answers for cancer patients," according to the companies. Dako also collaborates with a number of major pharmaceutical companies to develop new potential pharmacodiagnostics, or companion diagnostics, which may be used to identify patients most likely to benefit from a specific targeted therapy. Dako's products are sold in more than 100 countries employing more than 1,000 people, and in 2010 its annual revenue was approximately $340 million.  
Looking forward, Agilent said in a conference call about the acquisition that it expects Dako to generate sales $373 million in fiscal year 2013 and noted that it will probably report Dako sales as a separate segment. If Agilent's predictions of immediate gains from the acquisition hold true, it could be a good boost for the company, given that the life- science part of Agilent was responsible for roughly one-third of the company's 2011 revenue of $5.58 billion.    

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