This story first appeared on September 3.
Danaher’s impending acquisition of MDS’ Analytical Technologies division will include ownership of MDS' Molecular Devices business, which in turn sells a line of Axon GenePix scanners that are widely used by microarray users.
These products include the Axon GenePix 4400A, which can generate images with 2.5-micron resolution using four lasers, and the 4300A, which can generate images with up to 5-micron resolution using four laser scanners. Both scanners were launched last year (see BAN 5/13/2008).
MDS’ Molecular Devices business, based in Sunnyvale, Calif., also sells the older dual-laser Axon GenePix 4100A and 4000B scanners; the Axon GenePix Autoloader 4200AL for high-throughput scanning of array slides; the GenePix Pro software for array image analysis; the Acuity software for data storage, analysis, and visualization; and a menu of Arcturus array-labeling kits and other reagents and consumables.
An MDS spokesperson told BioArray News last week that it was too early to tell how the acquisition might affect the firm's array-related product lines.
Both the Axon and Arcturus product lines originated at Axon Instruments and Arcturus Biosciences. Molecular Devices acquired Axon in 2004 for $188 million and paid $10 million in cash for Arcturus Bio's laser capture microdissection business two years later. Three years later MDS acquired Molecular Devices for $615 million (see BAN 3/24/2004).
At the time, MDS combined Molecular Devices with its share of AB Sciex, a mass spectrometry joint venture between MDS and Applied Biosystems, to form its Analytical Technologies business.
Danaher, based in Washington, DC, said last week that it will pay MDS $650 million for the Analytical Technologies business, which includes the company's 50 percent stake in AB Sciex. Separately, the firm will pay $450 million to Life Technologies, which now owns ABI, for its share of the AB Sciex venture. It expects the acquisition to close by the end of the year.
Danaher said that the acquired businesses will operate within its Medical Technologies segment, joining Danaher’s Leica, Radiometer, Sybron, and KaVo businesses. Danaher said it expects the buy to expand the segment’s annual revenues by more than $650 million, of which $525 million will come from the mass spec business and the remaining $125 million from Molecular Devices.
Danaher Medical Technologies posted revenues of $3.3 billion in 2008. Total receipts for '08 were $12 billion, and the firm posted a net profit of $1.3 billion for the year.
In a statement, Danaher’s President and CEO H. Lawrence Culp called AB Sciex the "market leader in mass spectrometry" and said that Molecular Devices is "known for high-quality, innovative products in the segments it serves." He said the buy will "complement" Danaher's existing Medical Technologies businesses and "present an attractive value creation opportunity."
In a conference call to discuss the acquisition, Daniel Comas, executive vice president and chief financial officer of Danaher, acknowledged that the $200 million the firm paid for the Molecular Devices group was a steep decline in valuation from the $615 million that MDS initially paid in 2007.
"That business is less profitable today" than it was when MDS purchsed it, he said, noting that the Molecular Devices group was at one point operating in the mid-teen margin range, but it's "closer to break-even today."
Culp said in the call that he is confident that Danaher can rebuild the business, however. "As we have with some other companies, when we get in and back to basics with what we do in the labs and with the sales and service teams, we'll have the opportunity to get Molecular [Devices] back on its feet and back to where it was a few years ago," he said.
He acknowledged that that the key reason for the acquisition was the purchase of the mass spec business, but added, "to have Molecular Devices come into that is a deal bonus for us."