With only a few weeks left in 2006, it appears that this year’s 20 acquisitions among the BCW Index companies will fall just short of last year’s pace of 22 mergers and acquisitions (see table below). Even though much more money was spent this year — at least $13.3 billion versus at least $2.4 billion last year — the number is skewed by Thermo Electron’s $10.6-billion merger with Fisher Scientific (see BioCommerce Week 11/15/2006).
In addition, Millipore’s $1.4 billion purchase of Serologicals in July (see BioCommerce Week 4/26/2006) dwarfed last year’s biggest deal — Thermo’s acquisition of Kendro Laboratory Products for $833.5 million (see BioCommerce Week 1/27/2005). Excluding these two big deals, the other 18 acquisitions cost the acquiring firms at least $1.325 billion, with the purchase price for five of the deals remaining undisclosed.
In addition, last week PerkinElmer signed an agreement to acquire Evotec Technologies for $30.5 million (see related article). That transaction is scheduled to close either before thend of this month or early in 2007.
The Difference This Year
One of the most notable facts about this year’s acquisition activity was the significant decrease in purchases made by Qiagen and Invitrogen, last year’s most aggressive acquirers by far among BCW Index companies with eight acquisitions each. This year, Invitrogen made just one acquisition: the $25.9-million deal to acquire Sentigen, which was completed last week (see BioCommerce Week 9/6/2006).
Although Invitrogen officials insisted earlier this year that the firm intended to spend roughly $500 million on acquisitions in 2006, that plan was derailed by continuing difficulties in its BioReliance business, a massive IT overhaul, and integration issues related to last year’s purchases.
“We have been very aggressive on integrating our acquisitions,” said Invitrogen Chairman and CEO Greg Lucier during the firm’s third quarter conference call in late October (see BioCommerce Week 11/1/2006). “And perhaps for a company of our size, maybe too aggressive.
“We have slowed down the acquisitions this year,” he said. “We have gone back through the portfolio and reviewed it. I think we have done everything prudent to put the company on a better foundation. That is the painful work we're going through in 2006.”
Meanwhile, Qiagen has made only two acquisitions this year at a total cost of $60 million. In May, the firm acquired Gentra Systems for $38 million (see BioCommerce Week 5/10/2006). In October, Qiagen acquired Genaco Biomedical for $22 million, but that total could climb to $40 million if certain milestones are met (see BioCommerce Week 11/1/2006).
Transformative Deals
There were certainly a few deals of note this year that were transformative either to the companies themselves or to the industry as a whole.
Applied Biosystems, which had stayed out of the M&A market for a few years, made two significant acquisitions this year that are helping shape that firm’s transition into new markets. The firm acquired Ambion's research products division for $273 million in March (see BioCommerce Week 1/4/2006) and acquired Agencourt Personal Genomics from Beckman Coulter for $120 million in July (see BioCommerce Week 5/31/2006).
But this year’s biggest deal — Thermo’s $10.6 billion merger with Fisher Scientific — has everyone wondering what effect it will have on the industry. The merger created a company with 30,000 employees, 7,500 sales people, and 350,000 customers worldwide, along with a massive portfolio of research instruments and reagents.
The Thermo-Fisher merger is "a major move that has the potential of substantially changing the critical mass and the scale of economies of technologies on the life sciences industry," said Kevin Hrusovsky, CEO of Caliper Life Sciences, which is not part of the BCW Index but competes with many of the tool firms in the Index.
"My sense is that it's already created a lot of thinking, and a lot of people are already being impacted by this move,” he told BioCommerce Week this summer (see BioCommerce Week 7/5/2006).
Hrusovsky said he expects another transaction on the scale of Thermo-Fisher to happen this year in the research tools space. Though that hasn’t happened yet, it is possible the major industry players are waiting to see how the market is affected by the deal.
Also worth noting are two major acquisitions that are likely to have a significant impact on the industry but did not involve firms in the BCW Index. The first was Siemens’ $5.26-billion acquisition of Bayer Diagnostics, which makes the firm a major player in the molecular diagnostics space (see BioCommerce Week 7/5/2006).
The second is Illumina’s recent pact to acquire Solexa for $600 million (see BioCommerce Week 11/21/2006). The firm, which already sells instruments and reagents into the gene expression and genotyping markets, will now claim a stake in the next-generation sequencing market. It also believes the acquisition will greatly enhance its opportunities in the molecular diagnostics market.
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Mergers and Acquisitions by BCW Index Companies in 2006
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| Month Closed |
Acquirer | Acquiree |
Price
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| December | Invitrogen | Sentigen |
$25.9 million
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| November | Bio-Rad Laboratories | Ciphergen's proteomics business |
$23 million
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| Fisher Scientific | Thermo Electron |
$10.6 billion
|
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| October | Bio-Rad Laboratories | Blackhawk Biosystems |
Undisclosed
|
| Sigma-Aldrich | Advanced Separation Technologies |
Undisclosed
|
|
| Beckman Coulter | Lumigen |
$185 million
|
|
| Qiagen | Genaco Biomedical |
$22 million
(but could reach $40 million from milestone payments) |
|
| September | GE Healthcare | Biacore International |
$390 million
|
| July | Thermo Electron | GV Instruments |
$21 million
|
| Millipore | Serologicals |
$1.4 billion
|
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| Applied Biosystems | Agencourt Personal Genomics |
$120 million
|
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| Bruker BioSciences | Bruker Optics |
$135 million
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| May | Qiagen | Gentra Systems |
$38 million
|
| April | Sigma-Aldrich | Beijing Superior Chemicals and Instruments |
Undisclosed
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| Molecular Devices | Arcturus' LCM business |
$10 million
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| Agilent | SynPro |
Undisclosed
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| March | Applied Biosystems | Ambion's Research Products Division |
$273 million
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| Bio-Rad Laboratories | ProteOptics |
Undisclosed
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| Serologicals | Linco |
$74.8 million
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| Serologicals | Cytomix |
$7 million
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