Invitrogen, Applied Biosystems Merge
Deal, worth about $6.7 billion, anticipated to double Invitrogen’s consumables business.
June 12, 2008
Invitrogen Corp. and Applera Corp.’s Applied Biosystems Group will merge, according to a joint statement released by the companies on Thursday. The combination will create a company with core competencies in genetic analysis, proteomics, cell biology and cell systems.
The cash and stock transaction is worth about $6.7 billion, the statement said, with Applera-Applied Biosystems Group shareholders getting $38 per share. The cash percentage of the transaction represents about 45% of its value; the stock end of the deal is worth about 55 percent.
“This transaction combines the industry’s premier consumables provider with the industry’s premier systems provider to create a world-class biotechnology tools company,” said Gregory Lucier, Chairman and Chief Executive Officer of Invitrogen. “With this acquisition, we are nearly doubling our consumables business as almost half of Applied Biosystems’s revenues are consumable in nature.”
A deal of such magnitude seemingly bucks market expectations; a recent Bank of America analysis said Invitrogen would be unlikely to make a large acquisition in the near term. The report, dated May 14, said Invitrogen would be more likely to have “enthusiasm to accelerate organic growth and harvest cost structure inefficiencies,” and predicted that “smaller, tuck-in transactions” would be agreeable to shareholders instead.
A source familiar with the deal pointed out that—while the stock is already performing well—Invitrogen may eventually be giving a weightier-than-currently-valued paycheck to Applera shareholders.
“Combining Applied Biosystems’s and Invitrogen’s capabilities will realize growth opportunities greater and faster than either company could achieve independently,” added Mark Stevenson, President and Chief Operating Officer of Applied Biosystems.
The new company’s board of directors will include nine Invitrogen members and three from Applera; Lucier will remain as Chairman and CEO and Stevenson will become its President and COO.
Applera-Applied Biosystems shareholders can request all cash or all stock, subject to possible prorating. Invitrogen shareholders will retain a majority stake in the company. Applera shareholders will see a value of $38 per share provided the 20 day volume-weighted average price of Invitrogen remains in the range of $43.69-$46 a share; if it falls out of these parameters, value per share will change the statement said. According to the statement, the deal represents a 17% premium on Applied Biosystems’ closing share price from June 11.
Invitrogen’s stock was trading at $39.38 after the deal was announced, down more than nine percent.
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