Invitrogen, Applied Bio to merge

Invitrogen ponies up $6.7 billion in cash and stock to create a life sciences juggernaut

Chris Anderson
CARLSBAD, Calif.—Ina deal that looks to take advantage of the growth in cell biology andsequencing technologies, Invitrogen Corp. and Applera Corp. in mid-Juneannounced a merger plan that will see Invitrogen acquire all the shares ofApplera's Applied Biosystems Group in a cash and stock transaction valued atapproximately $6.7 billion. Applied Bio shareholders will receive the$38-per-share as a combination of 55 percent in Invitrogen shares and theremaining 45 percent in cash. The per-share price represents a 17 percentpremium over Applied Biosystems' closing price the day before the merger announcement.

Once the deal is finalized, expected this fall, the mergedcompany will operate under the name Applied Biosystems with its home base here,Invitrogen's current corporate headquarters. Invitrogen Chairman and CEO GregLucier will maintain both titles with the merged company, as will Applied BioPresident and COO Mark Stevenson. In all, the combined company will employ morethan 9,700 workers, 3,000 of whom are sales and service personnel, and willhave presence in more than 100 countries.

"This transaction combines the industry's premierconsumables provider with the industry's premier systems provider to create aworld-class biotechnology tools company," says Lucier, in a press release."With this acquisition, we are nearly doubling our consumables business asalmost half of Applied Biosystems' revenues are consumable in nature. It alsoprovides significant value creating opportunities for customers, shareholdersand employees alike."

The sale of Applied Bio comes as its parent company AppleraCorp. has spent the better part of this year examining business for options forboth it and sister company Celera. According to Tony White, Applera chairmanand CEO, the options for the company ranged from continuing to pursue itsacquisition strategy to increase the product portfolio, to restructuring withan eye toward remaining independent, to an outright sale or merger with anotherlife sciences company.

"This transaction provides attractive immediate value forApplera-Applied Biosystems shareholders as well as the ability to participatein future upside potential," says White in a statement announcing the deal. "Italso enhances our ability to serve the needs of our customers and positions usfor long-term success in the highly competitive and rapidly evolving lifesciences field."

Over the past couple of years, Applied Biosystems has beenshifting its revenue flow from its traditional base of big-ticket tools andsystems to one that derives a greater portion of its revenue from kits,reagents and consumables. A prime example of this strategy was the company'sMarch, 2006 $273-million acquisition of the DNA reagents and kits business fromTexas-based Ambion Corp. Today, the company derives more than half its revenuefrom the consumables side of the business compared to its tools franchise.

In this regard, Invitrogen and Applied Bio can be seen askindred spirits, as Invitrogen's focus in the market has been to build a broadportfolio of enabling technologies which address specific workflow and researchareas without being tied to specific tools, instruments and research platforms.
 

Chris Anderson

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