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Invitrogen Forms Integration Team, Expects $60M in Synergies in 2009

NEW YORK (GenomeWeb News) – Invitrogen announced today that it has named Mark Smedley, the firm’s global head of operations, to lead the integration team for its $6.7 billion acquisition of Applied Biosystems.
The Carlsbad, Calif.-based firm also said that it expects to realize synergies of $60 million in 2009 and total cost and revenue synergies of $175 million by 2011 as a result of the acquisition.
Invitrogen announced a week ago that it would acquire ABI in a cash and stock deal valued at around $6.7 billion. The combined company, which will retain the Applied Biosystems name but will be based at Invitrogen’s headquarters in Carlsbad, Calif., will have approximately $3.5 billion in revenue, of which roughly 70 percent will come from consumables and services.
Invitrogen noted that Smedley has 20 years of experience in the life sciences and pharmaceuticals industries, and he previously worked at drug giant Novartis, where he “led several global multi-business, multi-billion dollar integrations.”
“Mark has assembled a core leadership of over 30 highly talented, dedicated and hand-picked ‘change agents’ from both organizations who will take the best parts of their own organizations to plan for a stronger, better combination,” Invitrogen Chairman and CEO Greg Lucier said in a statement.
“We envision the new company being structured into businesses of molecular and cellular biology reagents, genetic sequencing systems and mass spectrometry,” he added.
The firm said that $125 million of the $175 million in total synergies will come from cost savings. During a conference call earlier this month announcing the deal, Invitrogen CFO David Hoffmeister said that cost synergies would come from “raw materials savings, elimination of overhead duplication, facilities rationalizations, and increased R&D efficiency and effectiveness.”
He added that the facilities rationalization portion of those savings would come during the second and third years following completion of the acquisition.
Analysts have speculated that cost savings will come specifically from streamlining general and administrative operations at ABI’s headquarters in Foster City, and shutting down the headquarters of ABI parent Applera in Norwalk, Conn.
ABI currently leases or owns roughly 60 facilities worldwide for manufacturing, distribution, warehousing, R&D, sales, service, and administration, according to its most recent 10-K filing with the US Securities and Exchange Commission.
Its biggest facilities in the US are its headquarters in Foster City, Calif., with approximately 320,000 square feet spread out over several buildings. The firm also owns three buildings with 149,000 square feet in Pleasanton, Calif., as well facilities in Austin, Texas; Framingham, Mass.; Warrington, UK; Rotterdam, Netherlands; Darmstadt, Germany; Hayward, Calif.; Bedford, Mass.; Tokyo; Narita, Japan; and Shanghai, China. The lease on its Tokyo facilities ends this year, while the leases for Framingham and Hayward are set to expire next year.
Invitrogen also said that it expects revenue synergies to come from product mix optimization, e-commerce merchandising, and broadening each company’s reach into faster growing segments, such as the applied markets and emerging geographies.

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