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Genomic Solutions Expands Arraying Business in Cartesian Tech Acquisition

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Genomic Solutions has agreed to acquire arraying equipment maker Cartesian Technologies and cut its workforce 25 percent as part of an overall consolidation of operations.

This acquisition expands the lineup of arrayers that Genomic Solutions is able to offer customers, said Tom Tisone, president of Cartesian. The company manufactures quill pin benchtop and medium- to high throughput arraying robots. Genomic Solutions’ GeneTac arrayers are much higher-throughput than most of Cartesian’s arrayers, and are aimed at “a much different target market,” he said.

As part of the merger, Cartesian will begin to offer its arrayers in combination with Genomic Solutions readers, scanners, hybridization technology and other aspects of its one-stop shopping approach, said Tisone.

The acquisition is a stock deal that also includes cash. The companies plan to wrap up the deal some time in October, but Cartesian will continue to operate “as an independent subsidiary,” Tisone said.

Genomic Solutions said the acquisition and other changes would allow it to achieve profitability by the first quarter of 2002.

“As a publicly held company [we must] determine what our stockholders are looking for, and we are doing it by becoming profitable and reducing the overhead,” said Kathleen Murphy, Genomic Solutions’ vice president of corporate communications. In the past three months, Genomic Solutions’ stock has dipped from a high of $6 per share into the $2 range. As of September 18, the stock was trading at $2.13 per share.

Part of the company’s strategy for getting into the black, the Cartesian acquisition indicates, is to focus its business more sharply on the arraying instrumentation market.

“Cartesian has a strong microarray business, with 170 instruments [placed] in the field, “ said Murphy. “We look at [the acquisition] as an extraordinary opportunity to grow our business. Their customers become Genomic Solutions’ customers.”

Genomic Solutions is also gaining entrance into a wider chunk of the instrumentation market through the acquisition of Cartesian, which also manufactures ink jet liquid handling equipment for high-throughput screening and instruments for protein crystallization. “This is a totally new business for Genomic Solutions,” Tisone said.

These bold changes follow Genomic Solutions’ July 31 report that its second quarter revenues remained flat at $4.5 million, and that its cash and cash equivalents had declined to $24 million, down from the $40.2 million listed at the end of 2000.

At this cash burn rate, Genomic Solutions would run out of money by the end of the first quarter 2002. By making these tough moves now, the company hopes to avoid this fate.

Genomic Solutions is also spinning off its proteomics research services business into an as-yet-unnamed company to be headed up by Genomic Solutions’ employees. Genomic Solutions will maintain a minority stake in the new spinoff, said Murphy.

Both Genomic Solutions’ and Cartesian’s customers have voiced concerns that this consolidation might disrupt service.

But Genomic Solutions said it would make sure the Cartesian customers continue to receive the level of customer service and technical support that they have received from Cartesian. “Whatever happens will be based on meeting the needs of the customers,” Murphy said.

As part of the merger, Genomic Solutions is planning to close its San Diego sales office and move its West Coast sales operations into Cartesian’s Irvine office. Similarly, the company will close Cartesian’s office in Huntingdon, England, and all operations for this office will move into Genomic Solutions’ Huntingdon facility.

The company will also close its Lansing, Mich., manufacturing facility, layoff some employees there, and move all remaining employees to its Ann Arbor, Mich., facility. The layoffs will total about 43 of the company’s 170 employees.

It is not yet clear how the Cartesian merger will affect Genomic Solutions’ global distribution agreement with PerkinElmer. PerkinElmer has an ongoing contract with Genomic Solutions to distribute Genomic Solutions’ products outside the US and Japan. Whether the company also becomes the sole distributor of Cartesian equipment outside the US and Japan is yet to be determined.

“The other thing that complicates this [matter] is PerkinElmer’s acquisition of Packard,” Tisone said. Packard also manufactures arraying equipment, some of which directly competes with that manufactured by Cartesian. “This is all becoming confusing and we need to sort this out,” said Tisone.

— MMJ

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