SANTA CLARA, Calif.—Affymetrix, Inc. and eBioscience, Inc.have announced the signing of a definitive agreement under which Affymetrixwill acquire privately-held eBioscience for a price of $330 million in cash,subject to certain customary adjustments. Affymetrix will fund the transactionthrough a combination of roughly 50 percent cash-on-hand and 50 percentcommitted debt, and the company plans to maintain eBioscience's management teamand operations in San Diego. The acquisition is subject to customary closingconditions, and the transaction is expected to be complete in the fourthquarter of 2011.
"The acquisition of eBioscience is transformational for ourbusiness, and we are enthusiastic about the opportunities it creates," Dr.Frank Witney, president and chief executive officer of Affymetrix, said in apress release. "With eBioscience, Affymetrix will significantly expand itsaddressable markets by adding an industry-leading portfolio of cell-based andimmunoassays. These new products are a critical part of our customers' workflowin our key target markets of translational medicine, oncology, and immunology.We believe that these markets represent a nearly three billion dollar annualopportunity, which will put Affymetrix on a solid path to sustained growth andprofitability. We look forward to welcoming the eBioscience team to theAffymetrix family."
Based in San Diego, eBioscience holds a position as anindustry leader in flow cytometry and immunoassay reagents for immunology andoncology research and diagnostics. eBioscience has products in areas of application such as flow cytometry and multiplexing, and in areas of biology such as angiogenesis, immunology, stem cell biology, metabolism and transcription factors, as well as cell, bone and cancer biology.
"The combination of Affymetrix and eBioscience hassignificant benefits," Tim Barabe, executive vice president and chief financialofficer of Affymetrix, said in a press release. "With 2011 sales expected toexceed $70 million, gross margins in excess of 70% and EBITDA margin ofapproximately 30%, eBioscience makes Affymetrix a much stronger company, bothoperationally and financially. The purchase price represents approximately 4.5times 2011 revenue and 14 times 2011 EBITDA."
Affymetrix has obtained a fully underwritten senior securedfinancing commitment of $190 million, which includes a $20 million revolvingcredit facility. This was led by administrative agent GE Capital, HealthcareFinancial Services and, as lenders, Silicon Valley Bank, CIT Healthcare LLC andCIT Bank. Affymetrix will have to retain cash-on-hand to the tune ofapproximately $95 million to cover its outstanding convertible debit that canbe put to the company in January 2013. the joint lead arragners and bookrunnersfor the transaction will be GE Capital Markets, Silicon Valley Bank and CITSecurities LLC.
The acquisition of eBioscience will allow Affymetrix tosupplement and further develop its molecular diagnostics business, in additionto diversifying its revenues to aid in complementing its genomics franchise.Affymetrix's product portfolio will see an increase with the addition ofmulticolor flow cytometry reagents, as well as a broad spectrum of reagents forthe analysis of cytokines, growth factors and soluble proteins. Affymetrixexpects an expansion of opportunities for Panomics RNA and protein analysisproducts, and also anticipates that the acquisition will result in growth andcommercial opportunities in post-genomic applications such as oncology, stemcell biology, diagnostics, immunology and cell biology.
"This transaction places Affymetrix at the forefront ofimmunology and oncology, two of the fastest growing segments of molecular andtranslational medicine," Dr. Stephen P.A. Fodor, founder and chairman ofAffymetrix, said in a press release. "eBioscience complements our traditionalbusinesses of genomics and cytogenetics, and dramatically strengthens ourfoundation in molecular diagnostics."
Houlihan Loky, Inc. was brought on by Affymetrix to act asits exclusive financial advisor for the transaction, with Davis Polk &Wardwell LLP brought on as legal counsel. For its part, eBioscience brought onJeffries & Co., Inc. as its exclusive financial advisor and DLA Piper LLPas its legal counsel.
