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Affymetrix Buying Flow Cytometry, Reagent Firm eBioscience for $330M

NEW YORK (GenomeWeb News) – Affymetrix today announced a definitive agreement to buy eBioscience, a flow cytometry and immunoassay reagent firm, for $330 million in cash.

The deal is expected to provide the Santa Clara, Calif.-based microarray firm with commercial opportunities in post-genomic applications of immunology, oncology, cell biology, stem cell biology, and diagnostics. Affy also said that it will augment its growing molecular diagnostics business.

The deal will diversify Affy's revenues "to complement its genomics franchise," and expand its product portfolio to include multicolor flow cytometry reagents, as well as reagents for research into cytokines, growth factors, and other soluble proteins, it said.

Affy expects the acquisition to "expand operational and new product opportunities for Panomics RNA and protein analysis products," and generate new growth opportunities by leveraging the commercial abilities of both firms.

In a research note, RW Baird analyst Quintin Lai said today that the deal is "a major step in transforming [Affymetrix] and specifically moving it away from a microarray business." He voiced, however, concerns about the price Affy is paying and the possibility that it "could limit the company's flexibility into the near term for future deals."

Calling the transaction "transformational" Affy President and CEO Frank Witney said in a statement that the cell-based and immunoassays provided by the acquisition "are a critical part of our customers' workflow in our key target markets of translational medicine, oncology, and immunology. We believe that these markets represent a nearly [$3 billion] annual opportunity, which will put Affymetrix on a solid path to sustained growth and profitability."

eBioscience's sales for 2011 are anticipated to exceed $70 million, Tim Barabe, executive vice president and CFO of Affy, said in the statement. The purchase price is roughly 4.5 times 2011 revenue and 14 times eBioscience's expected EBITDA.

Earlier this month the company reported that its third-quarter revenues retreated 14 percent year over year, and it reorganized into three new business units.

Affy has obtained a fully underwritten senior secured financing commitment of $190 million, which includes a $20 million revolving credit facility, led by administrative agent GE Capital, Healthcare Financial Services, and includes lenders Silicon Valley Bank, CIT Healthcare, and CIT Bank. It expects to pay for the deal through a roughly 50-50 split of cash on hand and committed debt.

Affy is required to keep cash on hand of about $95 million to cover its outstanding convertible debt that can be put to the company in January 2013. GE Capital Markets, Silicon Valley Bank, and CIT Securities will serve as joint lead arrangers and bookrunners on the deal.

eBioscience's management is expected to remain with the firm and its operations are expected to stay in San Diego.

The purchase is expected to close before the end of the year.

In early Wednesday trade on the Nasdaq shares of Affy were up 3 percent, matching a rise in the broader US market, to $4.77.

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