2007 Mergers & Acquisitions Review

It was another year of largely bolt-on acquisitions for major analytical instrument companies. The only pure-play instrumentation deal worth more than $1 billion was Madison Dearborn’s acquisition of VWR International (see IBO 5/15/07). However, acquisitions for companies in which laboratory instruments or associated products are one segment of the company’s many businesses yielded two deals of more than $1 billion. In May, Onex Healthcare acquired Eastman Kodak’s Health Group, which includes the Molecular Imaging business (see IBO 1/15/07), renaming the business Carestream Health. CCMP Capital’s May purchase of BOC Edwards, a maker of vacuum systems for instruments, from Linde (see IBO 3/15/07) also topped the $1 billion mark. The company is now known as Edwards and has installed a new management team. In both cases, the analytical instrument–related portion of the businesses appears to be receiving increased attention as part of smaller companies under private equity ownership.

These deals, as well as Madison Dearborn’s purchase of VWR International from Clayton, Dubilier & Rice (see IBO 5/15/07), the largest pure-play acquisition of the last 12 months, illustrate private equity’s continued activity in the analytical instrument and laboratory product market. Other notable private equity deals in the last 12 months were Gilde Buyout Partners BV’s purchase of process chromatography firm Groupe Novasep (see IBO 12/15/06) and Nova Capital Management’s acquisition of Barloworld’s Scientific Laboratory Group (see IBO 10/31/07). However, with the changes in the credit markets, private equity may have a more curtailed role in 2008, tempering valuations and improving acquisition opportunities for instrument companies.

IBO’s annual summary of mergers and acquisitions in the analytical instrument and laboratory product–related markets is comprised of deals announced between November 16, 2006, and November 15, 2007. The summary is based on publicly available information and is compiled from merger and acquisition news reported in IBO.

Last year’s Thermo Fisher Scientific mega-merger raised the specter of greater consolidation among the instrument industry’s major players. Yet the only major deal this year to unite two large suppliers was MDS’s acquisition of Molecular Devices (see IBO 1/31/07), which was the second largest pure-play acquisition in 2007. The acquisition marked a shift for MDS, whose Sciex business was previously mainly a manufacturer of products for Applied Biosystems and PerkinElmer. Now the company offers cellular analysis and microplate product lines, as well as sizable sales and distribution capabilities. Consolidation was also evident in Air Liquide’s purchase of Scott Specialty Gases (see page 2), Thar Technologies’ purchase of Mettler-Toledo’s super fluid chromatography business (see IBO 7/15/07) and PerkinElmer’s purchase of three companies that offer products for cell analysis (see IBO 11/30/06, 12/31/06, 4/15/07).

However, most larger instrument companies chose to build distribution and diversify product lines through smaller bolt-on acquisitions. In particular, many companies continued to expand global business opportunities through the acquisition of distributors, including Phenomenex (see IBO 4/30/07) and VWR (see IBO 3/31/07, 6/30/07, page 2). Other acquisitions that strengthened companies’ overseas opportunities included Thermo Fisher Scientific’s purchase of India’s Qualigens Fine Chemicals (see IBO 7/31/07), while Eppendorf AG’s purchase of New Brunswick Scientific (see IBO 7/15/07) and Ocimum Biosolutions’ purchase of Gene Logic’s Genomics business (see IBO 10/15/07) gave each company a greater presence in the US market.

Thermo Fisher Scientific was once again among the top five companies in the number of acquisitions made during the 12-month period. Thermo Fisher Scientific added businesses in a number of product areas, including a $70 million investment in HPLC through the purchase of Cohesive Technologies (see IBO 12/15/07). Another company on the top five list for a second year in a row is PerkinElmer.

For several companies, acquisitions diversified their product lines and end-user markets, including Genetix’s purchase of Applied Imaging (see IBO 11/30/06), GE Healthcare’s acquisition of Wave Biotech (see IBO 4/30/07) and AMETEK’s purchase of CAMECA SAS (see IBO 8/15/07). Two companies whose list of acquisitions were among the most notable in terms of diversification were Agilent and Roche. Agilent acquired four companies in the past 12 months, adding Kalabie’s electronic laboratory notebooks (see IBO 6/30/07), Stratagene’s PCR, reagent and diagnostic product lines (see IBO 4/15/07), and Velocity11’s laboratory automation products and software to its portfolio (see page 2). The acquisitions clearly position the company for a larger stake in the life science market, as well as the creation of integrated solutions for multiple stages of the laboratory workflow.

Like Agilent, Roche significantly upped its stake in the life science research market this year, becoming a notable new player in the genomics sector. The company’s three instrument-related acquisitions brought the company two of the genomics field’s signature technologies, DNA sequencers and microarrays, while its purchase of BioVeris gave it additional research and clinical reagents. Roche’s acquisitions of BioVeris (see IBO 4/30/07), NimbleGen Systems (see IBO 6/30/07) and 454 Life Sciences (see IBO 3/31/07) were also among the top five deals in terms of premiums paid.

Roche’s acquired technologies are also distinguished by their diagnostic capabilities. Diagnostics companies were another hot area for instrument company acquisitions this year. QIAGEN NV’s $1.5 billion purchase of Digene (see IBO 6/15/07) was among the biggest deals of the year. Agilent’s purchase of Stratagene (see IBO 4/15/07), PerkinElmer’s acquisition of ViaCell (see IBO 10/15/07), Luminex‘s Tm Bioscience transaction (see IBO 12/15/06), Genetix’s purchase of Applied Imaging (see IBO 11/30/07) Cepheid’s buyout of Sangtec Molecular Diagnostics AB (see IBO 2/15/07) and Carl Zeiss AG’s purchase of selected Clarient assets (see IBO 3/15/07) are also examples of investments in diagnostic-related technologies and products in the past 12 months. The acquisitions illustrate the growing role of research instrument providers in the molecular diagnostics and pathology markets.

Another adjacent market in which instrument and laboratory product companies continue to expand their stake is bioprocess. Sartorius AG (see IBO 2/28/07), GE Healthcare (see IBO 4/30/07) and IDEX (see IBO 6/15/07) were among the instrument and lab product companies purchasing bioprocess-related businesses this year. Sartorius and GE Healthcare’s deals both focused on disposable equipment for biopharmaceutical manufacturing.

Another technology segment with multiple acquisitions was materials testing. PerkinElmer acquired Triton’s thermal analysis product line (see IBO 1/15/07), Waters purchased Calorimetry Sciences Corporation (see IBO 8/15/07) and Roper Industries bought Dynisco (see IBO 12/15/07), while Nova Analytics (see IBO 9/30/07) and Anton Paar GmbH (see IBO 7/15/07) each purchased refractometry companies. These acquisitions were relatively small investments, but show the continuing interest in industrial applications.

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