Affymetrix Reaffirms Support For Thermo Fisher Merger; Origin Withdraws Offer

(RTTNews) - Affymetrix Inc. (AFFX) said that it determined that the unsolicited merger proposal submitted by Origin Technologies Corporation, LLC on March 22, 2016 does not constitute a Superior Proposal, as defined in Affymetrix' merger agreement with Thermo Fisher Scientific Inc. (TMO), and recommended against the Origin proposal.

Following the announcement, Origin Technologies Corporation, LLC , a newly created entity owned by a group of former Affymetrix executives for the purpose of privatizing Affymetrix, announced that it has withdrawn its proposal to acquire Affymetrix for $17.00 per share in cash citing unreasonable demands and timeline by Affymetrix.

AFFX closed Monday's trading at $14.10, down $0.83 or 5.56%. In the after-hours trading, the stock further dropped $0.11 or 0.78%.

On March 23, Affymetrix announced that the Board determined the Origin Proposal could reasonably be expected to lead to a Superior Proposal. Since that time, Affymetrix have devoted extensive time and resources to engaging with Origin. This included discussions with Origin and its advisors, providing due diligence information to Origin, negotiating the terms of a proposed merger agreement and engaging in reverse due diligence on Origin and its financing sources.

On March 26, Origin indicated it was prepared to continue to move forward only on the basis of the terms set forth in its March 22 proposal, which contemplated a reverse termination fee of $100 million, representing the maximum amount of recovery available to Affymetrix if Origin were unable to obtain financing. Origin's financing is subject to obtaining certain regulatory approvals in China. In addition, the reverse termination fee would not be payable if a transaction with Origin were blocked by the Committee on Foreign Investment in the United States or "CFIUS".

Affymetrix evaluated the terms of the Origin Proposal against the terms of its agreement with Thermo Fisher on a risk-weighted basis. While the Board found the $3.00 per share premium offered in the Origin Proposal, taken by itself, to be attractive, after engaging with Origin, the Board found the risks to initiating and consummating a potential transaction with Origin outweighed the potential benefit of a higher offer from Origin.

Further, Affymetrix determined that the $100 million reverse termination fee in the Origin Proposal that would be Affymetrix' sole and exclusive remedy against Origin in the event of a financing failure was inadequate when weighed against the material risk of Affymetrix stockholders losing the premium present in the approximately $1.5 billion equity value of the Thermo Fisher merger without any reasonable certainty of achieving the incremental premium proposed to be paid in a potential transaction with Origin.

Therefore, the Board determined the Origin Proposal does not constitute a Superior Proposal and recommended against the Origin Proposal.

The Special Meeting of Stockholders will take place as scheduled on March 31, 2016, to allow Affymetrix stockholders to consider approval of the merger agreement with Thermo Fisher and related matters. The boards of directors of both companies have unanimously approved Thermo Fisher's acquisition of Affymetrix at a price of $14.00 per share in cash.

Affymetrix remains subject to the merger agreement with Thermo Fisher and the Company's Board of Directors reiterates its recommendation in support of Affymetrix' merger with Thermo Fisher.

Separately, Thermo Fisher Scientific said that it is pleased that the Affymetrix board of directors has concluded that it merger agreement remains superior and continues to recommend that Affymetrix stockholders vote in favor of the transaction at the March 31, 2016, stockholder meeting.

"We are disappointed that Affymetrix has chosen not to pursue our compelling proposal despite our efforts to work in good faith toward a definitive agreement," said Dr. Wei Zhou, President of Origin. "We disagree with Affymetrix' assessment of the perceived risks of our proposal. It is an unfortunate outcome."

Origin's $17.00 per share all-cash offer for Affymetrix represented an 84.6% premium to Affymetrix' unaffected closing share price of $9.21 on the last trading day prior to the announcement of Thermo Fisher Scientific Inc.'s proposed acquisition of Affymetrix, and a 21.4% premium relative to Affymetrix' proposed transaction with Thermo.

Origin's proposal was backed by a financing commitment from Summit View Capital, a highly respected global investor headquartered in China with offices in the United States, as well as Managing Directors with deep roots in the U.S.

As a counter to Origin's proposal, Affymetrix required that Origin place hundreds of millions of dollars in a U.S. escrow account by Monday, March 28, 2016. This unrealistic demand was communicated to Origin during the evening of Friday, March 25, 2016, giving Origin only one business day to comply and transfer third party funds from an international firm into the U.S.