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Dharmacon to be Acquired by Fisher; Industry Execs Weigh In on the Deal

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Fisher Scientific said this week that it agreed to acquire Dharmacon for $80 million in cash, putting to rest rumors circulating throughout the industry that the privately held RNA reagent provider was on the block.

Fisher said that acquiring Dharmacon — which generated about $17 million in revenues last year — will help expand the company’s presence in the life sciences market, and is expected to help boost sales of higher-margin, proprietary products.

Dharmacon is to operate within Fisher’s scientific research segment, and its management will report into the company’s biochemicals business, Fisher vice chairman Paul Meister said during a conference call.

He noted that Fisher has “entered into extensions of contracts with all the key management” to keep them on following the acquisition, which is slated to close by the end of the first quarter. “I would say that, based on both the discussions that occurred and the contracts, we expect to have people around,” he added, and “we are pleased that the existing management team of [Dharmacon] will continue to run the day-to-day operations.”

Meister also said that the addition of Dharmacon’s sales force would boost the number of Fisher’s life sciences sales representatives to about 375, adding that a subset of these would focus on promoting Dharmacon’s products and services. Dharmacon employs between 12 and 15 sales reps.

“This, by and large, is a fairly technical sell,” Meister said during the call. “Dharmacon has a sales force and there are sales people within [Fisher’s recently acquired protein research company] Perbio, that have the capability to assist in expanding the footprint of the sales of this business. But it is not a product offering that would be put, for example, in the general Fisher catalog.”

Bound to Happen

To those in the RNAi sector, the acquisition comes as little surprise.

One top industry executive, who declined to be named, told RNAi News that he had been aware of talk over the possible acquisition of Dharmacon, and wrote in an e-mail that “Fisher was on the list of possible acquirers because they are in product acquisition mode.”

The executive noted that Fisher acquired Perbio Science’s Pierce brand of research product, and “clearly want[s] to be more directly involved in the industry and perhaps break away from the distributor label.” Fisher also acquired Perbio’s Endogen and HyClone brands.

Another industry executive, who asked to remain anonymous, cited a couple of factors that made Dharmacon a likely candidate for a takeover, including recent management changes. Notably, last summer Dharmacon’s founder Stephen Scaringe changed roles at the company, dropping out of the CEO position to become co-chairman and CSO.

Scaringe told RNAi News on Wednesday night that after a transition period following the acquisition, he would “start to be involved more at the corporate level with Fisher, as opposed to more the day-to-day things with Dharmacon.” He added that he will retain his co-chairman and CSO titles “in the short term,” adding that he will become more involved with Fisher over the long term.

When asked if this meant he would formally join the Fisher organization as an executive, Scaringe said that “there’s possibilities there, [but] the first order of business is getting the transaction completed.”

The industry executive also pointed out that Dharmacon has been increasingly finding itself up against “very well funded, entrenched competition,” namely companies such as Invitrogen, which recently purchased Sequitur (see RNAi News, 11/07/2003), and Qiagen. “So, you have a company that’s a willing buyer and probably a group that’s saying: ‘Now might be a good time to get out while the valuations are high.'”

As for the valuation, the first industry executive indicated that he thought Dharmacon’s $80 million price tag may be a bit high, “but not out of line if the technology continues to develop. Only time will tell if it pays off for them,” he concluded in the e-mail.

Scaringe said that he had been championing the acquisition, which had been a few months in the works, since the beginning. “To continue to do what we’ve been doing … looking for additional capital, looking for strategic partners, considering potential IPOs, and so forth was very prudent at this time,” he said. “At the same time, there’s been a lot of companies that have expressed an interest in Dharmacon … and so an acquisition was another course to explore.”

He added that “there’s so much that we want to accomplish in this field … [and] joining forces with Fisher allows us to more quickly grow and realize that vision.”

Concurrent with its announcement of the Dharmacon deal, Fisher also said that it had acquired microbiological research product maker Oxoid Group Holdings for $330 million.

—DM

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