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Agilent's $1.5B Acquisition of Varian Could Impact Array Business


By Justin Petrone

Agilent Technologies' intention to acquire Varian, announced this week, could affect the company’s microarray business.

Agilent said the deal, which will cost around $1.5 billion, is designed to expand its presence in the life-sciences research and applied markets, including environmental and energy applications.

The buy could also expand Agilent’s product portfolio into atomic and molecular spectroscopy and in other fields including nuclear magnetic resonance, imaging, and vacuum technologies.

Though Varian does not sell arrays, it does sell some products to array users, and has access to technology that could be useful for Agilent's microarray business, according to its website. These include Varian's StratoSpheres DNA synthesis cartridges for high-throughput oligonucleotide synthesis, and its StratoSpheres VariPep product for the synthesis of peptides.

While Agilent does not offer catalog protein arrays, it has sold custom protein arrays to customers in the past (see BAN 6/22/2005).

Another product that could complement Agilent's array business is Varian's PLRP-S 100 reversed-phase columns and media for oligo purification. Varian, based in Palo Alto, Calif., says the "cleaner" oligos produced using the columns and media could be used for "genomics applications, including quantitative PCR, microarrays, and gene synthesis assays."

An Agilent spokesperson this week said that it is "definitely too soon to talk about how the Varian agreement might impact individual product lines."

Agilent's array business has benefited in the past from other M&A deals. For example, the company's 2007 acquisition of Stratagene gave it access to reagent manufacturing capabilities that it now uses in its SureSelect target-enrichment offering for capturing sequences of interest for use on second-generation sequencing instruments (see BAN 7/8/2008).

Likewise, the Varian deal has been described by Agilent President and CEO Bill Sullivan as a "major step" in the firm's "transformation into a leading bio-analytical measurement company."

Following completion of the deal, which is expected by the end of 2009, Agilent CFO Adrian Dillon will be responsible for combining Varian with Agilent's Bio-Analytical Measurement segment.

Agilent said that it expects the acquisition to generate $75 million in annual cost synergies and achieve the firm's 20 percent return on invested capital target within four to five years.

Varian had annual revenue of around $1 billion for fiscal-year 2008. The firm Palo Alto, Calif.-based firm also reported its third-quarter financial results this week. It reported revenues of $196.6 million for the quarter, down around 20 percent.

The boards of directors of both firms have unanimously approved the all-cash offer, said Agilent. Shareholders of both firms will need to approve the deal as well.

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