NEW YORK (GenomeWeb News) – Bruker's core life science business stands to gain from a planned initial public offering of its Bruker Energy and Supercon Technologies subsidiary, according to an investment research analyst note issued today.
In the note from John Sullivan at Leerink Swann, he said that he views Bruker's IPO for the BEST business "positively," and that in addition to resolving uncertainty among investors over the likelihood and timing of such a move, "the IPO unlocks some shareholder value and allows [Bruker] management to focus on its core [life science] tools business."
The IPO filing was announced last week.
In his note, Sullivan suggested BEST had become a drain on Bruker's finances and said that product development in the BEST business requires "substantial R&D investment." Moving it into the public markets would allow such work to be independently financed.
He also noted that Bruker management said that one of the reasons for the IPO is that investors have "discounted" BEST's contributions to Bruker's finances "given its negative operating income contribution."
In 2009, BEST had $59.8 million in revenues and a net loss of $6.9 million, or $0.04 per share.
Through the first six months of 2010, BEST posted revenues of $38.8 million, a 78 percent increase from $21.8 million in H1 2009. The segment, though, still saw a loss of $2.8 million, or $0.02 per share, compared to a loss of $3.4 million, $0.02 per share, a year ago.
BEST develops superconducting and magnetic materials and devices and typical users of its technology include those in the power and energy sector and processing industry. Other customers include medical companies and those in applied sciences. Bruker expects to maintain a 70 to 75 percent stake in BEST, Sullivan said, and by doing so, the company "retains influence over a key component provider for a number of its [life science] products."
In its preliminary prospectus, Bruker said that the IPO is anticipated to raise as much as $100 million. In his note, Sullivan said that the figure could be as high as $300 million.
He expects the transaction to be completed by the end of the year depending on market conditions.