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Executives' Comments Stir More Speculation About ABI-MDS Mass Spec Joint Venture

NEW YORK (GenomeWeb news) - With the proposed $6.7 billion merger of Applied Biosystems and Invitrogen chugging toward completion, the chief executive of MDS, ABI’s mass-spec joint-venture partner, this week left open the possibility that his firm is at least considering purchasing that business.
 
At the UBS Global Life Sciences Conference this week, Stephen DeFalco intimated that changes could be made to his firm’s mass-spec partnership with ABI, even as ABI and Invitrogen officials insisted that there are no plans to sell any businesses of either company as part of the merger, including ABI’s mass-spec business, which generated $539 million in revenue in its fiscal 2008, ended June 30.
 
Because the terms of partnership between MDS and ABI are confidential, DeFalco spoke obliquely about what parts MDS may be revisiting or what post-merger snags it foresees. He also was miles away from saying that MDS is actively pursuing a buyout of the mass-spec business.
 
Indeed, DeFalco was careful to say that MDS’ partnership with ABI has worked out “pretty good” for MDS’ shareholders and that most of the company’s focus is currently on technology development and getting new products to market, not on exploring alternatives to the existing partnership.
 
However, he also said that as MDS ponders the future of the ABI partnership post-merger, it is exploring all options, including the purchase of the mass-spec business, dissolution of the joint-venture agreement, and recommitting to the joint-venture agreement.
 
“It’s a wide-open canvas,” commented DeFalco, in contrast to what ABI and Invitrogen have been saying.
 
While acknowledging that mass specs would have something of a step-child relationship to the rest of the new company, officials from ABI and Invitrogen have maintained that it is also an asset that they intend to hold onto. ABI’s mass specs are the industry leaders in terms of market share.
 
During a joint session held by both firms this week at the conference, ABI and Invitrogen executives restated their commitment to the business.
 
“We’re not going to plan for any change in ownership … We’re going to run that business for success,” said Greg Lucier, the chairman and CEO of Invitrogen, who will take on the same roles in the combined company, which will retain the Applied Biosystems name.
 
He said that going forward the focus will be on developing new applications for the hardware and consumables for the instruments. “You’re hard-pressed to find a business that does half-a-billion dollars [in sales] … and 20 percent operating margins,” Lucier said.
 
In the new company, the mass spec business is expected to make up about 12 percent of total revenues, said Mark Stevenson, the president and COO of ABI, who will take on both positions with the new firm. In fiscal 2008, mass spec revenues represented 24 percent of total revenue for ABI. In 2007, it accounted for 25 percent of total revenue.
 

 
A more comprehensive version of this article appears in this seek's issue of ProteoMonitor.
 

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