Capital idea

HBIO sells bulk of capital equipment lines to Digilab

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HOLLISTON, Mass.—When Harvard Bioscience Inc. (HBIO) sold its Genomic Solutions Division and Maia Scientific subsidiary to Digilab Inc., in early December, HBIO exited capital equipment and recommitted to apparatus and instrumentation for researchers. As HBIO narrowed focus, Digilab broadened offerings for research and in vitro diagnostics.
"We're pleased with the transaction," says David Giddings, Digilab's CEO. "It's highly complementary to our commitment to pre-analytic tools for the life sciences research market. We have a very strong position as that market evolves and certainly has begun to move from microarraying in a genomics context to a microarraying capability in support of proteomics."

Giddings also sees the Genomic Solutions technology having relevance for personalized medicine and, more immediately, Digilab's Peptidomics business, which discovers and develops biomarkers for low molecular weight peptides. Meanwhile, Maia Scientific's imaging technology and reader supports high-content analysis applications, a market Giddings estimates at $80 million and $250 million within five years.

HBIO sold the two businesses for $1 million cash plus additional consideration in the form of an earn-out based on 20 percent of revenue generated by the acquired business as it is conducted by Digilab over a three-year period, post-transaction. HBIO, says president David Green, intends to sell its COPAS flow cytometry line separately.

Green says focusing on apparatus generally costing under $10,000—rather than capital equipment selling for $100,000 or more—lends stability to HBIO. Green believes capital equipment sales fluctuations disguised the attraction of HBIO's underlying business. "The good thing about the apparatus business is it's pretty predictable," says Green. "It doesn't have a lot of volatility in it."

HBIO's business model is so appealing the company staved off an unsolicited buyout attempt on Dec. 14. The offer of $5 a share from stockholder Skystone Advisors LLC was rejected because, Green says, "$5 a share is a very low valuation for the company." Green points to HBIO's compound annual growth rate of revenue of 23 percent annually over the last 10 years, despite a "choppy environment" as proof of its strength.

All 60 genomic solutions employees moved to Digilab, raising the company's count to 92 people.


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