This story originally appeared in Biocommerce Week, a newsletter that has been discontinued.
For the second time in two years, Bruker BioSciences has signed a deal to acquire an affiliated Bruker company in an effort to expand its breadth of products, its range of applications, and its market reach.
The acquisition of Bruker BioSpin for $914 million in cash and stock will provide Bruker BioSciences with complementary instruments based on BioSpin's magnetic resonance core technology for life science and analytical research applications. The deal also will push Bruker to nearly $1 billion in annual revenue and enable the firm to more effectively compete in a greater number of markets already addressed by larger competitors, such as Thermo Fisher Scientific, PerkinElmer, Agilent Technologies, Waters, and Applied Biosystems.
Perhaps most interesting is Bruker’s plan to combine technologies from the acquisition for molecular diagnostics applications.
“The combination will give us a broader marketing footprint and a broader range of complementary technologies,” Frank Laukien, president and CEO of Bruker BioSciences, said during a conference call this week.
“We will benefit from enhanced global distribution and customer support capabilities,” he said. “We will be in a better position to increase our brand leverage … and we hope to see additional opportunities for cross-selling of our various instruments and solutions and for developing integrated systems, such as combined [nuclear magnetic resonance]-mass spec systems for metabolomics.
“We’re looking forward to developing a combined strategic initiative in clinical research systems, molecular diagnostics research, and molecular imaging between Bruker BioSciences and the Bruker BioSpin group,” Laukien added. He said this initiative, which would develop in 2008, would primarily combine mass spec and NMR, but also infrared optical clinical research systems.
“We believe what will emerge in 2008 will be a focused molecular diagnostics division drawing on technologies and resources from various Bruker Corporation operating companies,” said Laukien.
In August 2005, BioSciences unit Bruker Daltonics registered its autoflex II MALDI-TOF mass spectrometers as class I medical devices with the Korea Food and Drug Administration with an eye on eventually selling the instruments for use in the molecular diagnostics market (see BioCommerce Week 8/18/2005). The autoflex II instruments are part of Bruker's ClinProt integrated system for peptide and protein biomarker profiling.
The registration had put Bruker Daltonics on a path to expand its mass spec business from research laboratories to commercial laboratories and hospitals. The firm’s mass spectrometers were already being used by GeneMatrix, a South Korean biotech firm, for molecular diagnostic applications, which the company offers to medical centers and university hospitals in the country.
But over the past two years, Bruker has made few statements about its intentions in the molecular diagnostics market, even as many of its competitors have talked about employing their instruments for such purposes.
In early 2006, ABI sold its 50-percent stake in Celera Diagnostics to its sister company Celera Genomics in exchange for the right to sell instruments to end-user diagnostic customers (see BioCommerce Week 1/11/2006).
Agilent, which has hinted that its Lab-on-a-Chip platform would be best-suited for molecular diagnostics development, earlier this year purchased Stratagene for $250 million. That acquisition gave Agilent an immediate presence in the molecular diagnostics market through Stratagene’s alliances and its own portfolio of assays (see BioCommerce Week 6/13/2007).
Meanwhile, PerkinElmer’s market-leading mass spec-based neonatal and genetic screening business has been complemented over the past year or so by acquisitions that push the firm’s technologies closer to diagnostics purposes (see BioCommerce Week 10/3/2007).
Greater Market Reach, Product Breadth
Laukien said during the call that the combined firm, which will be renamed Bruker Corporation, will have “critical mass in distribution around the globe.”
The company will sell complementary instruments and systems including mass spectrometry, magnetic resonance, x-ray analysis, elemental analysis, and molecular spectroscopy for molecular and materials research, as well as industrial and applied analysis.
Among the applications the combined firm will be able to target are metabolomics, expression proteomics and structural biology, biomarker discovery, molecular diagnostics research, molecular imaging, forensics analysis, food and beverage testing, and agricultural analysis.
“We’re looking forward to developing a combined strategic initiative in clinical research systems, molecular diagnostics research, and molecular imaging.”
“There are additional opportunities for synergistic value creation … from leveraging our global marketing, sales, and support capabilities in particular applications such as metabolomics, small molecule biomarker and applied analysis solutions, in combined 3D structure and function solutions using both NMR and x-ray,” and in customer relationships, said Laukien.
Bill Linton, lead director of Bruker BioSciences and chairman of its special committee of independent directors, said in a statement, “The combined company will considerably increase and diversify its market presence, technology base, product lines, global distribution, and customer support capabilities.”
With the acquisition of BioSpin, Bruker expects to grow 2008 revenues at 8 percent or more, which could be accelerated to 10 percent or greater “in the medium term,” said Laukien.
The deal calls for Bruker BioSciences to acquire the US and German companies in the Bruker BioSpin Group for $388 million in cash. It will acquire the Swiss Bruker BioSpin holding company and its subsidiaries for roughly 57.5 million shares of Bruker BioSciences valued at a total of around $526 million.
The firm expects to fund the acquisition with $47 million of existing cash and draw down $341 million from a planned $380 million senior credit facility underwritten by JP Morgan Securities and Citi Markets and Banking.
Bruker BioSpin is 100 percent owned by members of the Laukien family, who also own 52 percent of publicly traded Bruker BioSciences. Following completion of the deal, which is expected early next year, the combined firm will be renamed Bruker Corporation and 60 percent of its shares will be held by the Laukien family.
Bruker BioSpin’s shareholders and board of directors have already approved the acquisition, while Bruker BioSciences’ shareholders will vote on the deal in the first quarter of 2008.
Bruker BioSpin had 2006 revenues of $447 million and net income of $56.6 million. The combined firm expects to have 2007 pro forma revenue of more than $900 million.
Asked during the conference call why the transaction is being done now, Laukien said, “There is no magic to the timing.”
Bruker BioSciences’ revenue growth has “accelerated nicely in the last five or six quarters,” he said. “It has been a steady ongoing process from a long-term shareholder perspective that started in the year 2000 with Bruker Daltonics becoming a public company.”
He said the smaller-scale acquisition of affiliate Bruker Optics for $135 million last year was successful for the previously private Bruker Optics shareholders as well as the public shareholders, and it improved the depth and breadth of products sold by Bruker BioSciences (see BioCommerce Week 4/19/2006).
In particular, that acquisition gave Bruker BioSciences access to the $700 million molecular spectroscopy market and offered the firm growth in a variety of applied markets, such as pharma forensics, food and beverage testing, and feed and agricultural analysis.
Laukien said that the shareholders of Bruker BioSpin recognized the positive experience of Bruker Optics being part of the BioSciences group and decided that “this was a sensible long-term strategy to have all of the Bruker companies in one public Bruker company.”