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ABI Leases Texas Manufacturing Facility to Delphi; Layoff Rumors Persist

Applied Biosystems is leasing its Texas-based instrument manufacturing facility and shifting some employees to Delphi Medical Systems, a multi-faceted instrument manufacturer.

The deal, which closed on June 6, was announced by Delphi earlier this week, though the transaction was reported by BioCommerce Week sister publication GenomeWeb News last week.

Based in Stafford, on the outskirts of Houston, ABI's facility employs around 50 people, an employee at the facility told BioCommerce Week. The 50,000-square-foot facility manufactures mass spec instruments and related software, protein sequencers, peptide- and DNA-synthesis products, and cell-detection instruments.

A spokesperson for ABI confirmed the deal, but could not disclose the financial terms. She said that employees at the facility who have been making products for ABI would continue to do so, and Delphi confirmed that it would hire ABI employees at the facility.

The leasing of the facility is consistent with an ongoing restructuring at ABI, especially in its proteomic instrument business. Last September, the company said it would transfer its Voyager MALDI-TOF and 4700 MALDI-TOF/TOF instruments, made in Houston, to its joint venture with MDS.

R&D and manufacturing of the Voyager and 4700 mass spectrometers — the only ones that ABI manufactured in-house at the time — and related intellectual property were to be moved to the ABI/MDS Sciex Instruments joint venture in Toronto, spokespersons for both ABI and MDS told BioCommerce Week sister publication ProteoMonitor (see ProteoMonitor 9/10/2004) in September.

In a Sept. 1, 2004, letter to customers, Laura Lauman, president of ABI's proteomics and small molecule division, wrote, "Our MALDI manufacturing in Houston and some of our MS product development in Houston and Massachusetts will be transitioned to Toronto, Canada, over the coming months."

ABI also reduced its MALDI R&D group in Framingham, Mass., by an undisclosed number of people and planned to transfer the remainder of the group to Toronto. All future MALDI-TOF-based mass spec systems will be developed in Toronto, the spokespersons told ProteoMonitor.

Delphi Medical Systems, a unit of Troy, Mich.-based Delphi Corp., manufactures instruments for dialysis, infusion, in vitro diagnostics, respiratory care, and equipment for monitoring vital signs.

Layoffs Looming?

Meanwhile, rumors have persisted that ABI is planning to lay off a fairly significant number of employees later this month. An ABI spokesperson declined to comment on the speculation. "We don't usually comment on rumors, internal or external," she said.

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While these kinds of rumors are not unusual for a company that has reorganized — as ABI has done over the past year — and could be the work of short sellers in the market, job cuts would not surprise at least one analyst who covers the firm. Pacific Growth Equities analyst Adam Chazan told BioCommerce Week, "I wouldn't be surprised, but would be curious to see where they're going to do it and what else that might mean beyond the obvious ongoing fat-trimming."

In the first half of last month, the firm's shares spiked roughly 10 percent, likely due to rumors about further restructuring at ABI or a possible break-up with Applera sibling Celera (see graph).

On Tuesday, ABI's shares closed up 1.25 percent at $21.03, off its 52-week high of $22.94, reached on May 12.

— Edward Winnick ([email protected])

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