Magellan says: automate this

After the acquisition of TekCel, Magellan Biosciences indirectly continues to expand its automation instrument empire as TekCel announces its acquisition of ultra-low-temperature sample-management specialist Biophile, Inc., based in Charlottesville, Virginia. Biophile's systems are used for temperature-sensitive work involving DNA, tissue, and tumor storage, and complement the automation systems already in play at TekCel and Magellan Bioscience.

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CHELMSFORD, Mass.—Spurred by a common chief executive officer and majority investor, Magellan Biosciences Inc. announced in mid-May the acquisition of sample management and assay-automation tool provider TekCel of Hopkinton, Mass. Immediate plans are to leverage TekCel's existing strength in fluid handling and automation with Magellan subsidiary Dynex's DSX plate processor and its line of plate readers and washers.
"This really is a natural fit for the two companies," says David Frank, CFO of TekCel. "The Dynex technologies consist of plate readers and washers which need to be manually operated. There isn't a way right now for these to be run in a walk-away mode and that is where TekCel's technology comes into play."
While the synergies of the two companies appear obvious, the initial impetus for the acquisition by Magellan had helping hands at the top of both companies in Robert J. Rosenthal, CEO of Magellan and TekCel. Additional matchmaking was provided by equity firm Ampersand Ventures which held majority investment positions in both companies, according to Rosenthal. While those built-in synergies would seem to make the match a slam dunk, that was not the case here.
"Bob excused himself from the due diligence being performed by both companies," says Frank. "Like any potential business deal, this took between six and nine months to get done as management on both sides looked at the potential deal to make sure it made business sense."
In the end the pieces TekCel brought to the table matched very well with both Magellan's current needs and its projected future direction and business model. "The focus of Magellan is in two areas," says Rosenthal. "One is life science tools and tools for biomedical research and the other is in clinical tools and diagnostics." When combined, Dynex, TekCel and Magellan's other subsidiary ESA Biosciences form a formidable troika with annual sales approaching $50 million and a reach into both drug discovery research and the clinic. Currently, Magellan derives about 55 percent of its revenue from the diagnostic market and the remainder from life science research, but Rosenthal anticipates a higher percentage will come from diagnostics in the future.
While TekCel's technology presents an opportunity for greater automation for Dynex products, Rosenthal anticipates the clinical customer bases of ESA and Dynex will help TekCel broaden its reach into the clinical market, particularly with its secure-storage and tissue sample management products. In addition, Rosenthal says, there should be ample opportunity for researchers from both companies to "work together to share expertise, ideas and technology platforms, opening up new frontiers for our customers and driving growth for Magellan."
Plans call for TekCel and its 35 employees to remain at its present location and for the company to retain its name as an operating subsidiary of Magellan. "I'm at odds with some people in this regard, but I feel in these niche markets, customers come to respect and enjoy working with certain brands," Rosenthal notes. "Brand equity has a role to play and we will keep the things that touch TekCel's customers intact."
Magellan was formed late last year via the combination of Chantilly, Va.-based Dynex and ESA. The TekCel deal may not have sated the hunger of Magellan for further acquisitions, however, as Rosenthal hinted there could be other companies added to the portfolio by the end of the calendar year.

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