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Invitrogen, Applied Bio to merge
CARLSBAD, Calif.—In a deal that looks to take advantage of the growth in cell biology and sequencing technologies, Invitrogen Corp. and Applera Corp. in mid-June announced a merger plan that will see Invitrogen acquire all the shares of Applera's Applied Biosystems Group in a cash and stock transaction valued at approximately $6.7 billion. Applied Bio shareholders will receive the $38-per-share as a combination of 55 percent in Invitrogen shares and the remaining 45 percent in cash. The per-share price represents a 17 percent premium over Applied Biosystems' closing price the day before the merger announcement.
Once the deal is finalized, expected this fall, the merged company will operate under the name Applied Biosystems with its home base here, Invitrogen's current corporate headquarters. Invitrogen Chairman and CEO Greg Lucier will maintain both titles with the merged company, as will Applied Bio President and COO Mark Stevenson. In all, the combined company will employ more than 9,700 workers, 3,000 of whom are sales and service personnel, and will have presence in more than 100 countries.
"This transaction combines the industry's premier consumables provider with the industry's premier systems provider to create a world-class biotechnology tools company," says Lucier, in a press release. "With this acquisition, we are nearly doubling our consumables business as almost half of Applied Biosystems' revenues are consumable in nature. It also provides significant value creating opportunities for customers, shareholders and employees alike."
The sale of Applied Bio comes as its parent company Applera Corp. has spent the better part of this year examining business for options for both it and sister company Celera. According to Tony White, Applera chairman and CEO, the options for the company ranged from continuing to pursue its acquisition strategy to increase the product portfolio, to restructuring with an eye toward remaining independent, to an outright sale or merger with another life sciences company.
"This transaction provides attractive immediate value for Applera-Applied Biosystems shareholders as well as the ability to participate in future upside potential," says White in a statement announcing the deal. "It also enhances our ability to serve the needs of our customers and positions us for long-term success in the highly competitive and rapidly evolving life sciences field."
Over the past couple of years, Applied Biosystems has been shifting its revenue flow from its traditional base of big-ticket tools and systems to one that derives a greater portion of its revenue from kits, reagents and consumables. A prime example of this strategy was the company's March, 2006 $273-million acquisition of the DNA reagents and kits business from Texas-based Ambion Corp. Today, the company derives more than half its revenue from the consumables side of the business compared to its tools franchise.
In this regard, Invitrogen and Applied Bio can be seen as kindred spirits, as Invitrogen's focus in the market has been to build a broad portfolio of enabling technologies which address specific workflow and research areas without being tied to specific tools, instruments and research platforms.