Key Highlights

  • BioLife Solutions will be removed from the S&P SmallCap 600 because Repligen is acquiring the company.
  • Freshworks will replace BioLife in the index before the market opens on October 8.
  • BioLife makes biopreservation media used to store and transport cells and tissues for cell and gene therapy developers.
  • Freshworks jumped to a 52-week high on the news, reflecting anticipated buying from index-tracking funds.

BioLife Solutions (NASDAQ:BLFS), a supplier of products that help preserve cells and tissues for cell and gene therapy developers, is leaving the S&P SmallCap 600 because it is being acquired by Repligen (NASDAQ:RGEN). S&P Dow Jones Indices said Freshworks (NASDAQ:FRSH), the customer-service and IT software company, will replace BioLife in the index before the market opens on October 8.

The terms of Repligen's Acquisition and BioLife's share move on Tuesday, October 6, were not detailed in the reports available, so the index change is the clearest development of the day.

How Index Removals Work

S&P Dow Jones Indices maintains a fixed number of companies in each of its main indexes. When a member is acquired, the committee that oversees the index names a replacement, typically timing the change to coincide with the expected completion of the deal. Funds that track the S&P SmallCap 600 must then sell the departing stock and buy the new entrant on the effective date.

For a company being acquired, removal from an index usually has limited effect on its share price, because the stock's value is anchored by the Takeover terms. For the incoming company, the picture is different. Freshworks jumped to a 52-week high on Tuesday after the announcement, as investors anticipated buying from index funds.

What BioLife Does

BioLife Solutions makes biopreservation media, which are specialized solutions used to store and transport cells, tissues and organs at low temperatures without damaging them. Its products are used by companies developing cell and gene therapies, where keeping living cells viable during Manufacturing and shipping is essential.

Repligen supplies filtration, chromatography and other bioprocessing equipment and consumables that drugmakers use to manufacture biologic medicines. Both companies sell to biotech and pharmaceutical manufacturers, so the combination brings together related product lines aimed at the same customers. Repligen is a mid-sized company, and the purchase adds a specialized supplier to its portfolio.

A Tough Day for Health Care

The news landed during a difficult session for health-care stocks. Health care was the only S&P 500 sector to decline on Tuesday. Life-science tools makers such as Danaher (NYSE:DHR), Thermo Fisher (NYSE:TMO), Agilent (NYSE:A) and Bruker (NASDAQ:BRKR) fell, and Vaccine makers Moderna (NASDAQ:MRNA) and Novavax (NASDAQ:NVAX) slid after the World Health Organization lowered its plague risk assessment to low. Only 48 of 428 Russell 2000 health-care stocks advanced.

Health-care deal-making was active, though. McKesson (NYSE:MCK) and Clayton Dubilier & Rice agreed to take Option Care Health (NASDAQ:OPCH) private at $32.05 a share in cash, in a deal valued at about $5.8 billion including debt.

The broader market rallied to records. The S&P 500 rose 44.98 points to close at 7,818.93, and the Nasdaq Composite finished at a record just under 27,600. The Dow Jones Industrial Average added 253.38 points to 51,521.28. Smaller companies lagged, with the Russell 2000 slipping to about 2,830, and Treasury yields eased, with the 10-year near 5.28.

October 8 Is the Effective Date

The index change takes effect before the open on October 8, so trading in BioLife and Freshworks could be heavier around Wednesday's close as funds rebalance. Investors will also watch for the completion of Repligen's acquisition and any remaining regulatory or Shareholder steps.