NEW YORK (GenomeWeb) – Saying that it does not believe its Chemical and Applied Markets division can achieve "acceptable financial performance" in the next two years, Bruker today said that it plans to sell and/or restructure certain parts of the CAM business, resulting in an expected 200 to 250 layoffs.
In a document filed with the US Securities and Exchange Commission, Bruker said the planned actions would result in a reduction in annual run-rate revenues of between $50 million and $70 million, while profits are estimated to improve by $15 million to $20 million per year upon the completion of the reorganization.
The decision to reorganize the CAM division was approved by Bruker's board on July 18 following a decision by management that it no longer made sense to keep the business. CAM was formed in 2010 following Bruker's purchase of certain Varian businesses and has been a weight on Bruker's finances almost from the start. At a recent investor's conference, a company official said that Bruker would be making changes to the division.
In its SEC document today, Bruker outlined three steps as part of its reorganization plans for CAM. It intends to divest or sell CAM's gas chromatography product line and related services, including its GC systems and analyzers as well as its GC-mass spectrometry single quadrupole products. Bruker said that it is in discussions for a potential sale of at least some the assets.
Also, the company intends to sell or restructure CAM's inductively coupled plasma-mass spectrometry product lines and related services and is in discussions for the potential sale of these assets. Bruker, however, will keep CAM's GC-liquid chromatography-coupled triple quadrupole mass spectrometry product lines and related services, saying that business has "attractive growth opportunities in the applied, pharmaceutical, clinical, and life sciences research markets."
The company will start on its plans for CAM in the current quarter and expects to complete them by June 30, 2015.
As a result of the actions, Bruker expects to take CAM-related restructuring and other one-time charges of $35 million to $40 million between the second half of 2014 and the first half of 2015. It said that anticipated proceeds from any sale of CAM-related assets could not be calculated currently.
CAM generated about $100 million in revenues in 2013, Bruker said.
Investors welcomed the news today by pushing shares of Bruker up almost 3 percent on the Nasdaq this afternoon to $24.09.
In a note, Wells Fargo analyst Tim Evans said that the reorganization of the CAM division was not surprising, though "the expected results of the restructuring are more favorable than we anticipated." He raised his 2015 EPS forecast to $1.09 from $1.07 and maintained an Outperform rating on Bruker's shares.
The ISI Group's Ross Muken added that the move is a "positive development" for Bruker that will likely be applauded by investors, although Bruker's current stock price may already take into account the possibility of a CAM restructuring. Nonetheless, today's announcement could add $.06 to $.08 to the consensus EPS for Bruker over time, he said.
He kept his Neutral rating on the company.