NEW YORK, April 19 –Genomic Solutions and PerkinElmer have settled a lawsuit over PerkinElmer’s stake in Genomic Solutions stock, the companies said Thursday.
Genomic Solutions also released financial results for the first quarter of 2001 Thursday, reporting that revenues increased 10 percent over the year-ago quarter to $4.4 million, and that losses totaled 12 cents per share, 4 cents more than Wall Street had expected, according to a survey of one broker conducted by FirstCall/Thomson Financial.
In the settlement, Genomic Solutions has agreed to buy back 69 percent of PerkinElmer’s 5.2 percent equity stake in the company, terminating PerkinElmer’s “call right” to shares of Genomic Solutions stock. The right, which PerkinElmer acquired under Genomic Solutions’ terms of incorporation, would have allowed PerkinElmer to become the sole shareholder in Genomic Solutions. PerkinElmer had initiated the lawsuit back in February, alleging that Genomic Solutions’ proposed transaction with an unnamed third party would effectively eliminate PerkinElmer’s call right.
Following the settlement, Genomic Solutions and PerkinElmer have expanded their marketing agreement. In the revised agreement, PerkinElmer will market Genomic Solutions' microarrays and other products in the United Kingdom, and will continue to serve as the sole distributor of Genomic Solutions products in other areas outside the U.S. and Japan.
"PerkinElmer is an important strategic partner for Genomic Solutions, and we are pleased to end this litigation in a manner that is constructive for both parties," Jeffrey Williams, Genomic Solutions CEO, said in a statement.
"It became increasingly clear to us after our IPO last year that eliminating the call option on our company was a strategic necessity,” Williams said. “We believe we are now in an improved position to implement our business plan, and we are glad that certain institutional and other investors who are restricted from purchasing callable common stock, a nontraditional security, will no longer be prohibited from investing in our company.”
Genomic Solutions attributed its financial results for the quarter to weak sales in Europe and Asia, where PerkinElmer has been its distribution partner.
But Williams emphasized that the stronger distribution agreement it has recently forged with PerkinElmer, which includes minimum requirements on sales, would help to ameliorate these problems.
"Although we were disappointed with first quarter sales, we believe PerkinElmer will be able to build significant sales and support capability for our products for the long term,” Williams said. “We remain convinced that PerkinElmer is the best distribution partner in these markets, and we are committed to working with them to maximize the sales potential for our products outside of the United States and Japan. “
Genomic Solutions said its quarterly losses decreased over the year-ago period. The total losses were $3.0 million, compared to $3.9 million for the first quarter of 2000, or $14.2 million, including a non-cash common stock warrant charge and a non-cash deemed dividend on issuance of preferred stock.
But the company said it expected Q2 revenues to surge 20 percent over the second quarter of 2000, and projects 40 to 50 percent revenue growth for the third and fourth quarter over 2000.
The company has also said net losses for the second quarter would total between ten and 12 cents per share for the second quarter, but this would exclude the repurchase of PerkinElmer’s Genomic Solutions stock. For the third quarter, the company projected losses of between six and eight cents per share, and said it foresaw losses of between four and seven cents per share for the fourth quarter of 2001.
In late morning trading, Genomic Solutions common stock was trading at $2.97, down 11 cents from Wednesday’s close of $3.08 per share on the Nasdaq.