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GE Healthcare Makes $390M Offer for Biacore To Expand Presence in Protein Analysis Market


Looking to expand its protein sciences business, GE Healthcare made an offer this week to acquire Biacore International for approximately SEK2.9 billion ($390 million).

Both GE Healthcare and Biacore said that the deal, if completed, would bring together two companies with "very complementary" products: Biacore's surface plasmon resonance-based instruments are used for studying protein-protein interactions and protein function, while GE Healthcare's liquid chromatography and electrophoresis products are used in proteomics and protein purification.

"One of the key reasons that we like Biacore so much is that it has a very strong customer franchise and a very solid product line. There are definitely some synergistic effects with our current portfolio and it'll be easy to integrate," said Peter Ehrenheim, CEO of GE Healthcare Life Sciences, in a conference call to discuss the offer.

Asked why GE Healthcare chose to go with Biacore's SPR-based technology rather than other proteomics technologies such as mass spectrometry, Ehrenheim said "most of the mass spec companies that have the same franchise [as Biacore] would demand a bigger transaction."

Ehrenheim said he "wouldn't exclude" the possibility of acquiring a mass spec company in the future, but noted that GE Healthcare is not ready to make such an investment at this time.

"In many cases, the Biacore instrument would be the lead investment for the customer, and then we could have our protein-purification workhorse around that product."

Ehrenheim said he envisioned bundling products from the two firms to make "bigger packages" for customers. "In many cases, the Biacore instrument would be the lead investment for the customer, and then we could have our protein-purification workhorse around that product," he said.

In addition, both companies expect to benefit from expanded markets.

"There are clearly institutions where Biacore has a very strong franchise, where we can get some help to get in," said Ehrenheim. "There are also places, for example in biomanufacturing, where we have a very strong franchise and there is an increasing trend to use Biacore, for example, for quality control… Furthermore, I think we have a pretty strong franchise when it comes to drug discovery labs -- that's another area [that] I think we can help to pull Biacore's instruments into."

Eric Walldèn, CEO and president of Biacore, pointed out that Biacore's product-development efforts would also benefit from the acquisition.

"It's difficult for a small company to -- in the long term -- maintain product development," he told ProteoMonitor. "This [deal] would support growth and create more critical mass in technical product development products."

Biacore currently employs about 300 people worldwide. The company has about 75 people working in research and development in Uppsala, Sweden, while GE Healthcare has about 350 people in Uppsala working in R&D. The combination of the two companies' R&D teams would create a "de facto center of excellence" for protein science, Ehrenheim said.

The "center" would not be a physical facility, he said, but rather a descriptive term for the two companies' R&D departments, which are already located in facilities that are close to one another.

Common History

Both Biacore and GE Healthcare have roots in Pharmacia Biotech, a developer of biochromatography, electrophoresis, and other life sciences technologies.

In the mid 1980s, expertise from the Uppsala-based company was brought together with know-how from the Linkoping Institute of Technology and the Swedish National Defense Research Institute to create a spin-off company called Pharmacia Biosensor.

That company's first product, launched in 1990, was an SPR-based analytical instrument for studying biomolecular interactions called Biacore. This was followed by a number of subsequent Biacore-branded products, so the company decided to change its name to Biacore in 1996.

About a year later, Amersham International merged with Pharmacia Biotech and Norway-based Nycomed, and the combined company was ultimately acquired by GE Healthcare in 2003 in a $9.5 billion deal (see ProteoMonitor 10/17/2003).

In 2002, Pfizer acquired Pharmacia from Amersham in a $60 billion stock-for-stock deal (see ProteoMonitor 7/29/2002), making Pfizer the largest shareholder in Pharmacia-spinoff Biacore. Pfizer holds 41 percent of the company's share capital and voting rights.

According to GE Healthcare and Biacore, Pfizer has "irrevocably and unconditionally" committed to accept GE's offer to acquire Biacore.

Biacore's board of directors, who together hold approximately 0.3 percent of Biacore, have also committed to accept the offer, the companies said.

Terms of Acquisition

GE Healthcare said it intends to make the offer document available to the public on July 7. An acceptance period for the offer will then extend until August 10. Settlement of the offer is expected to begin on or around August 15.

Biacore currently trades on the Stockholm Stock Exchange under the symbol "BCOR." The offer of SEK330 per share represents a premium of 35 percent relative to Biacore's volume weighted average share price of SEK245 on the SSE during the month ended June 19, and a premium of 17 percent relative to the closing share price of SEK282 on June 19, the day on which the acquisition was announced.

-- Tien Shun Lee ([email protected])

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