Ortho Clinical Diagnostics shares surged 11% in premarket trading

Ortho Clinical Diagnostics shares surged 11% in premarket trading.

Quidel Corporation(NASDAQ:QDEL)has agreed to acquire Ortho Clinical Diagnostics(NASDAQ:OCDX)for $24.68 per share of common stock for a total equity value of nearly $6B, the companies announced Thursday. Both Ortho Clinical (OCDX) and Quidel (QDEL) shares are currently on hold for trading.

According to the definitive agreement signed by the parties, Quidel (QDEL) has offered cash and newly issued shares in the combined company indicating a 25% premium for Ortho’s closing price on Dec. 22, 2022.

Per the terms, for each Ortho (OCDX) share they won, Ortho investors are set to receive $7.14 in cash per common share and 0.1055 shares of common stock in the combined entity. They will own nearly 38% of the combined company, which will be led by Quidel’s current President and CEO, Douglas Bryant.

With the acquisition of Ortho Clinical (OCDX), a player in vitro diagnostic, Quidel (QDEL) expects to generate an estimated $90M cost synergies by year three in the combined company. The deal is also anticipated to yield revenue synergies over $100M by 2025 and opportunitiesfor adjusted EBITDA margin expansion.

A few days ago, JPMorgan identified Quidel (QDEL) as one of its top picks to short in 2022.