Although the COVID-19 outbreak may have slowed M&A activity across many industries earlier this year, there is evidence that this trend has reversed itself. This is true for the scientific tool industry as well.

There were no multi-billion dollar plus acquisitions involving life science assets in 2020, although Thermo Fisher Scientific tried, before abandoning its plan to buy QIAGEN for $11.5 billion (see IBO 8/15/20). In fact, the industry’s most dominant companies largely stayed on the sidelines, except for PerkinElmer with its planned purchase of Horizon Discovery (see IBO 11/15/20).

However, in two other sectors of the analytical tool business, deals topped $1 billion. Sensor firm and industry outsider Amphenol announced this month its intention to purchase MTS Systems, a provider of physical testing instrumentation for materials characterization, for $1.7 billion (see Executive Briefing). Even so, the deal’s price-to-sales ratio of 1.9 was not among the top five this year. Another multi-billion deal was struck when chemicals firm Royal DSM acquired food testing firm Romer Labs (see IBO 6/15/20) as part of its $1.1 billion takeover of Erber, an animal health and nutrition company. In both deals, the laboratory tools were a segment of the acquired company’s assets and not the primary driving factor behind the purchases, but nonetheless brought new competitors in the respective markets.

In IBO's annual review of M&A activity (purchase of a majority stake in the company or the entire company), we examine the acquisition activity reported in IBO between December 31, 2019, and December 15, 2020. Our analysis includes only pure-play deals, excluding acquisitions of dedicated diagnostic or process (analyses conducted inline and online during manufacturing) companies, even if made by a lab product company. The financial figures presented are drawn from available sources. Sales and purchase prices were not available for all announced acquisitions and thus these purchases are not listed in the article’s tables.

M&A in General

For companies in many industries, factors such as the global impact of the COVID-19 pandemic and the recently completed US presidential election were the main influences of companies participating in M&A in 2020. According to Deloitte's "M&A Trends Survey: The future of M&A," a September survey of 1,000 executives across industries, 61% believed that M&A activity will reach pre-pandemic levels within the next 12 months and assist companies in recovery in a post-COVID-19 economy. The most significant percentage of executives, 57%, reported that they are interested in taking a proactive stance in M&A in response to the pandemic. The aggressive strategy mostly entails executives reconfiguring their businesses to acquire companies that will boost underperforming portfolios and give them a competitive edge. In contrast, 43% of executives want to take a more defensive route, which entails looking to divest underperforming businesses and integrate recently acquired companies to their core businesses. Additionally, in the survey, defensive-minded executives are also looking to partner with other companies to safeguard their core business from another potential economic disruptor like the pandemic.

The uncertainty surrounding the US presidential election engendered a variety of responses from M&A executives. The largest percentage of executives surveyed, 25%, reported that the election slowed down their M&A activity, followed by 23%, for which it quickened the closing of existing deals. Additionally, 18% stated closing deals became more complicated, while another 18% reported that the election had no impact. Lastly, the remainder, 16%, said they had a smooth process in closing M&A deals during the election.

Other key insights in the Deloitte M&A survey included 42% of executives interested in nontraditional M&A and 33% wanting to accelerate their long-term goals. Also, international deal-making has declined, with most executives wishing to concentrate on more domestic deals. Lastly, since M&A activity is currently being done in a virtual setting, cybersecurity is a concern amongst the executives in the survey.

Target Markets

In 2020, acquisitions of companies in the areas of bioprocess analysis, cell-based analysis and informatics were top targets of the scientific tool sector. The largest deals for the cell-based instrument market came from 10x Genomics and Bio-Rad Laboratories and were focused on single-cell analysis. 10x Genomics purchased two companies in the spatial analysis space, including its whopping $350 million acquisition of ReadCoor (see IBO 10/15/20), while Bio-Rad with a $100 million deal for Celsee (see IBO 4/15/20). Meanwhile, mentioned above, Horizon Discovery will give PerkinElmer access to cell editing capabilities.

As has been a pattern for a number of years, flow cytometry also attracted suitors. Bruker entered the market by acquiring Canopy Biosciences (see IBO 9/15/20), which also signaled the company’s deeper overall interest in cell analysis and genomics. Yokogawa Electric's investment in Fluid Imaging Technology (see IBO 5/1/20) marked its entry into the market and further growth of its cell analysis franchise. Other flow cytometer deals included Fluidigm's buyout of sample prep instrument firm InstruNor (see IBO 3/2/20).

Multiple companies participated in acquisitions to expand their informatics-related businesses, showing how much analytical informatics drives scientific insight across a spectrum of technologies. Illumina secured two software purchases, scooping up BlueBee (see IBO 7/2/20) and Enancio (see IBO 7/15/20) to create a more integrated ecosystem of sequencing data and genomics analysis for clinical applications. This month, ZEISS acquired a majority of arivis (see Executive Briefing), its first dedicated microscopy software purchase. Lastly, data management solutions provider Dotmatics bulked up instrument data capture capabilities by purchasing BioBright (see IBO 7/2/20), furthering lab connectivity. Danaher expanded its data analysis platform for water quality with the purchase of Aquatic Informatics' (see IBO 8/5/20), which joined the company’s Water Quality Platform Program. Likewise, Brooks Automation added new software resources, purchasing RURO (see IBO 2/15/20).

The bioprocessing market was another driver for M&A activity this year with both new and established players taking part. Sartorius was especially active in the bioprocess LC markets, including purchasing various Danaher assets (see IBO 5/1/20) to bring it into new markets, such as LC hardware, and BIA Separations (see IBO 10/15/20). Sartorius purchases were the largest deals within the overall analytical bioprocessing market, with a combined investment of $1.2 billion. Repligen continued to build its bioprocess LC franchise, buying single-use provider ARTeSYN Biosolutions (see IBO 11/2/20).

Bioreactors were also a hot area, with market newcomer Getinge purchasing well-established player Applikon (see IBO 12/31/19). Another newcomer to the bioreactor segment, newly formed and KKR-backed Gamma Biosciences (see IBO 3/2/20) made its first bioreactor purchase buying Univercells (see IBO 2/29/20), and Beckman Coulter (Danaher) stepped into the market for the first time, though on the lab scale, acquiring m2p-labs (see IBO 11/15/20). Analytical instruments dedicated to bioprocess monitoring solutions were also on the radar, with MilliporeSigma's acquisition of RESOLUTION Spectra Systems (see IBO 7/15/20), adding Raman technology and a narrow entry into the Raman market.

Building Businesses

Many companies in 2020 expanded their footprints in technologies and applications where they already have a considerable presence. Gamma Biosciences had an active year in general with its LC firm Astrea Bioseparations scooping up two LC companies, Nanopareil (see IBO 10/1/20) for bioprocess applications, and Essential Life Solutions for the lab LC (see IBO 9/15/20). As noted above, other bioprocess purchases were executed by Sartorius and Repligen.

Outside of LC, 10x Genomics, as noted above, stepped its presence in spatial cell analysis, while Abcam continue to expand life science reagent offerings (see IBO 3/15/20). Consolidation in the centrifuge market was evident in Eppendorf’s purchase of Koki Holdings' centrifuge business (see IBO 3/31/20). Other examples of market focus by specific companies include Illumina’s software buys discussed above, VERDER’s purchase of Porotec (see IBO 8/31/20), In-Situ’s acquisition of Partech (see IBO 10/15/20) and JOEL buying Integrated Dynamic Electron Solutions (see IBO 1/31/20).

Diving into New Markets

Several acquisitions marked an introduction to a new market for selected companies. Waters stepped into completely new territory, buying liquid handler firm Andrew Alliance for $80 million (see IBO 1/15/20). Advion expanded into LC, purchasing Interchim (see IBO 2/29/20) as did Sartorius, as noted above. Also aforementioned, Beckman Coulter, Bio-Rad, Bruker, Getinge, MilliporeSigma and Yokogawa Electric were new entrants into different markets. Meanwhile Badger Meter was an entirely new entrant to the analytical instrument market, buying s::can (see IBO 11/15/20).

Divestments

Another form of M&A activity in 2020 was companies' divesting select product lines to concentrate on core businesses. Bio-Rad Laboratories divested its long-held spectroscopy database business to John Wiley & Sons (see IBO 4/15/20). Malvern Panalytical exited the rheometry business, selling the product line to NETZSCH (see IBO 3/2/20) as part of a larger slimming down plans for parent company Spectris. Another company continuing to shed businesses was Oxford Instruments, which sold its 47% ownership of Scienta Omicron, a surface science technology provider (see IBO 1/31/20).

2021

In 2021, the pace of deals could accelerate as the world’s economy regains stability, depending of successful containment of COVID-19, and larger lab tool firms look to deploy the healthy amounts of cash they hold. It is likely cell analysis continues to attract attention, with companies such as Agilent Technologies, Bruker and PerkinElmer publicly indicating interest in the sector. It could be another big year for bolt-ons by Thermo Fisher, having moved past the QIAGEN bid and in line with past years. Danaher is likely to continue its ongoing M&A activities, having publicly stated it is prioritizing the Life Sciences division for M&A activities. In addition, companies such as Agilent and Waters have disclosed investments in smaller firms that may mature into purchases, as was the case with Waters and Andrew Alliance.