The shares of Catalent, Inc. ( NYSE: CTLT ) added ~22% to reach the highest level since October on Monday, as Jefferies estimated a $96 per share offer price for a potential M&A deal with Danaher Corporation ( NYSE: DHR ).
The upsurge comes after Bloomberg reported Saturday that Danaher ( DHR ) had shown interest in the contract manufacturer, indicating “a significant premium” for the Washington-based company in recent months.
Assuming the multiple Thermo Fisher ( TMO ) paid for contract manufacturing organization Pantheon in 2017, Jefferies analyst David Windley argues that a potential deal with Danaher ( DHR ) could value Catalent ( CTLT ) at just under $93 per share or $20.7B, including debt.
Jefferies has Buy ratings on both Danaher ( DHR ) and Catalent ( CTLT ), with price targets at $310 and $67 per share, respectively.
However, Citi is cautious about a potential deal due to concerns about strategic fit and Danaher’s ( DHR ) prior remarks on acquisitions in the CRO and CDMO field.
The analyst Patrick Donnelly with a Buy rating and $325 per share target on Danaher ( DHR ), noted that as recently as 2022, the company’s management indicated a lack of interest in the CDMO space due to current customer needs.
“……we believe the potential acquisition of CTLT would be viewed skeptically given the lower margin profile and lower cost synergy potential,” Donnelly added.
Interestingly, Bank of America shrugs off previous management remarks. “Although DHR has said it was uninterested in pursuing services deals, at a high level, such a combination would make sense in our view,” as both companies cater to “adjacent” markets, the analyst Michael Ryskin wrote.
“However, while DHR has the balance sheet to buy CTLT, questions, and considerations remain,’ Ryskin added with a Buy rating and a $310 per share target on Danaher ( DHR ). The stock is trading ~2% lower in the morning hours.
Read: Seeking Alpha contributor Cory Cramer reaffirmed his Sell rating on Danaher ( DHR ) recently, arguing that the slide in COVID-related demand “will likely place pressure on the (company’s) stock price.”
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Catalent climbs 22% on Danaher interest as Jefferies sees $93/share deal