Bruker BioSciences hopes to expand its reach in a variety of applied markets through its $135-million acquisition of affiliated company Bruker Optics, a privately held maker of molecular spectroscopy products.
The purchase, announced this week, will enable Bruker BioSciences to sell mass spectrometry, X-ray-analysis, and now molecular spectroscopy platforms for proteomics as well as chemical and materials analysis. Bruker President and CEO Frank Laukien said the firm was "very pleased" to gain access to the $700 million molecular spectroscopy market.
Bruker Optics, based near Bruker BioSciences in Billerica, Mass., develops, manufactures, and sells research, analytical and process-analysis instruments based on Fourier transform infrared and near-infrared technology, and on FT and dispersive Raman spectroscopy. In addition, the company exclusively distributes bench-top non-FT nuclear magnetic resonance instruments made by affiliate Bruker BioSpin.
Bruker Optics has research and manufacturing facilities near Karlsruhe, Germany, and Houston, as well as "numerous" international sales, applications, and service offices. In 2005, it recorded $78.7 million in total revenue and a $6.3 million net profit, the company said. As of Dec. 31, 2005, the company had around $4.3 million in cash.
"We are particularly excited about the success and further growth prospects of Bruker Optics in pharmaceutical process analytical technology, and in pharma forensics, as well as in food and beverage and feed and agricultural analysis."
Many firms that make instrumentation for genomic and proteomic applications have been looking beyond the medical research field at an array of potentially lucrative applications such as forensics, biosecurity, food and environmental testing, and quality assurance/quality control that fall under the umbrella of applied markets. Applied Biosystems, a Bruker rival in the mass spectrometry field, recently said these applications represent a $6-billion market opportunity.
"As part of this acquisition, Bruker BioSciences will gain access to some fast-growing new market segments and applications," Laukien said during a conference call this week. "We are particularly excited about the success and further growth prospects of Bruker Optics in pharmaceutical process analytical technology, and in pharma forensics, as well as in food and beverage and feed and agricultural analysis."
Dan Klevisha, vice president of sales and marketing for Bruker Optics, said during the call that the deal would enable Bruker BioSciences "to leverage sales and marketing synergies from the resulting three Bruker BioSciences operating companies for incremental growth in several industrial applications."
Following the acquisition, which is expected to close this summer, Bruker Optics will become a Bruker BioSciences operating company, joining Bruker Daltonics and Bruker AXS. Dirk Laukien will continue to manage the business as senior vice president.
"We believe integration of this acquisition will not disrupt the operations of any of the three operating companies and will be relatively seamless because of our shared business model and common set of values," said Frank Laukien. "Bruker BioSciences and Bruker Optics already have similar corporate cultures and have established a spirit of cooperation from working closely over many years.
"With the addition of Bruker Optics, Bruker BioSciences will considerably increase and diversify its market presence, its technology base, product lines, global distribution, and customer-support capabilities," said Laukien during the call. "This acquisition is expected to create a life science and analytical systems company with greater than $400 million of revenue in 2006, and with improved net income and operating income."
Terms of the Deal
The agreement calls for Bruker BioSciences to pay 59 percent, or $79.2 million, of the selling price in cash and 41 percent, or $55.8 million, in stock. The acquisition has been approved by both companies at the board level or by a "special committee" of directors.
Five undisclosed members of the Laukien family who currently own approximately 58 percent of Bruker BioSciences also own 98 percent of Bruker Optics' stock, making the acquisition a "related-party transaction." The Laukien shareholders will accept "various combinations" of cash and Bruker BioSciences stock for their Bruker Optics shares, the company said.
The Laukien family will own between 62 percent and 63 percent of the shares of Bruker BioSciences following the transaction, up from 58.5 percent before the deal.
Company officials disclosed during the call that Frank Laukien will receive 80 percent Bruker BioSciences stock and 20 percent cash in consideration for his 19.1-percent stake in Bruker Optics.
The acquisition is being accounted for as a pooling of interests, and all transaction costs will be expensed in the second or third quarter of 2006, company officials said during the call. Under pooling of interest accounting regulations, Bruker Optics' 2006 net income will be added to Bruker BioSciences results for 2006.
On a pro forma basis, the deal is expected to be accretive to Bruker BioSciences in 2006 by $.03 per share, and in 2007 by $.03 to $.05 per share.
Bruker Biosciences expects to have a cash balance of $40 million following the acquisition, "which will be adequate to fund the continued growth of our business," said CFO Bill Knight during the call. He added that the firm does not expect the acquisition to lead to any "major restructurings."
Edward Winnick ([email protected])