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Harvard Bioscience Buys Genomic Solutions for $26M

This article has been updated from an earlier version.

 

NEW YORK, July 18 - Harvard Bioscience today said it will buy Genomic Solutions for about $26 million in cash and stock.

 

Genomic Solutions CEO Jeff Williams, 36, will remain and will be nominated to join Harvard's board. The company also will undergo a "major restructuring," which includes a 30-percent reduction in head count as part of a move to trim expenses by 40 percent, Williams said in a conference call this morning.

 

"We are going to be very careful what we do in the marketing and sales area and very careful what we do in the manufacturing area," Williams said. He added that the company intends to leave untouched its main manufacturing sites in Ann Arbor, Mich.; Huntington, UK; and Irvine, Calif.

 

Harvard said it will pay Genomic Solutions with 3.2 million shares and $9 million in cash and claims the deal, which should close during the fourth quarter, will contribute to revenue and earnings over the last three months of this year as well as 2003.

Harvard also said the acquisition will boost by $5 million fourth-quarter revenue and add $20 million to 2003 revenue. 

 

Last month, Genomic Solutions received a dicouraging letter from the Nasdaq market saying its stock had failed to stay above $1 for 30 consecutive days. The exchange had given Genomic Solutions 90 days to bring its shares above $1 or risk being delisted to Nasdaq's Over-the-Counter exchange.

 

Still, news of the acquisition came as a surprise to some analysts who believed that despite its poor stock performance, Genomic Solutions enjoys a relatively firm foothold in a few strong niche markets, including automated protein preparation, high-throughput preparation, and microarray preparation.

 

"They find themselves with some difficulty in the market," said Thomas Flaten, an analyst with RBC Capital Markets. "Certainly, their products are fairly well received in the marketplace. But given where their stock is it would have made it too difficult to drive short-term value to shareholders."

 

Harvard has bet that bringing on board Genomic Solutions as a subsidiary will help it sell its own technology. Harvard also said Genomic Solutions will use its customer databases for sales leads.

 

The deal also will likely let Genomic Solutions "leverage" Harvard's relationship with Amersham  Biosciences while allowing Harvard to take advantage of Genomic Solutions' history with PerkinElmer. Equally important, according to both companies, is Harvard's goal of giving Genomic Solutions a strong foothold in Europe.

 

Genomic Solutions had a little more than $7 million in cash as of March 31 and posted a $1.6 million net loss for the three months ended that day. The company has not yet report financial results for the second quarter, which ended on June 30.