Following a broad rebound in merger and acquisition (M&A) activity in 2010, consolidation among analytical instrument and laboratory product–related companies continued at a prevalent pace this past year. Danaher, Thermo Fisher Scientific and PerkinElmer highlighted this year’s M&A market, together spending roughly $10 billion on pure-play acquisitions, of which roughly half were financed through new debt offerings. Along with a number of other companies, these firms capitalized on improved debt markets, low interest rates and strong cash reserves.

IBO’s annual summary of M&A in the analytical instrument and laboratory product–related markets is comprised of deals announced in IBO between November 15, 2010, and November 15, 2011. The article and tables are based on publicly available information.

As usual, there were some acquisitions that proved to be game changers. Thermo Fisher Scientific’s acquisition of Dionex propelled the company into the top ranks of HPLC providers (see IBO 12/15/10). ITT’s purchase of YSI put it into a position to rival Hach’s dominance in the water quality–testing market (see IBO 7/15/11). PerkinElmer’s four software acquisitions for a combined sum of $267 million transformed the company into a provider of lab informatics, including significant positions in the cheminformatics and electronic lab notebook markets. For CambridgeSoft, PerkinElmer paid $227.4 million (see IBO 3/31/11). Geospiza (see IBO 5/15/11), ArtusLabs (see IBO 3/31/11) and Labtronics (see IBO 5/31/11) were acquired for $13.3 million, $15.2 million and $11.4 million, respectively.

Thus, it is no surprise that Thermo and ITT’s acquisitions were among the top five pure-play deals, ranking second and fifth, respectively. The other three largest pure-play deals were driven by expansion into adjacent markets. Danaher’s acquisition of Beckman Coulter, which was valued at $6.8 billion (see IBO 2/15/11), was the largest pure-play transaction this past year. The deal complements Danaher’s in vitro diagnostics business, offers entry into the molecular diagnostics market and strengthens its presence in Asia-Pacific. For analytical instruments, Danaher also envisioned as part of the value-creating acquisition strong growth potential for Beckman’s lab and life science products, which include centrifuges, liquid handling and capillary electrophoresis systems. These products are sold to many of the same end-markets as those served by Danaher’s Leica Biosystems and AB SCIEX businesses.

Similarly, PerkinElmer’s acquisition of Caliper Life Sciences (see IBO 9/15/11), the third-largest pure-play deal of the last year, gave the company access to adjacent markets, expanding its presence in the fast-growing in vivo animal imaging and next-generation sequencing sample preparation markets. PerkinElmer will also benefit from Caliper’s higher operating margin and strong revenue growth to help offset declining radiochemical and pharmaceutical sales.

Spectris’s acquisition of Omega Engineering (see IBO 8/15/11), the fourth-largest acquisition, was also strategic, as the company sought to grow its Industrial Controls business with differentiated product and service offerings. The acquisition also provided the company with high margins, as well as additional manufacturing expertise and scale.

The Caliper, Dionex and YSI deals were also among the top five premiums paid in the last year for pure-play acquisitions. Premiums paid in 2011 for the top five pure-play acquisitions had an average price-to-sales ratio of 3.4, compared with 4.3 in 2010. The variance is attributed to Danaher’s acquisition of Beckman, which had a price-to-sales ratio of 1.8, compared with last year’s largest transaction between Merck KGaA and Millipore (see IBO 2/28/11), which resulted in a ratio of 4.4. Beckman’s lower premium resulted from recent quality issues related to its diagnostics tests. This year’s highest premium paid was Becton Dickinson’s purchase of Accuri Cytometers (see IBO 2/15/11), which generated a price-to-sales ratio of 10.3. The second-highest premium paid belonged to Techne for its purchase of Tocris (see IBO 5/15/11).

Bolt-on acquisitions accounted for the majority of deals this last year, as companies added to existing product lines or workflows. Bolt-on acquisitions made Thermo and Bruker among the leading companies in total pure-play acquisitions this past year, with five and four purchases, respectively. Bruker’s acquisitions added new products and technologies in line with the company’s existing end-user markets, including materials research for $13 million (see IBO 10/15/11) and security (see IBO 1/15/11). Thermo’s bolt-ons included additions to its laboratory product offerings (see IBO 12/31/11, 5/31/11) and MS workflow (see IBO 9/15/11). Also adding technology for its MS workflow was Agilent (see IBO 3/15/11). In total, Agilent completed three bolt-on acquisitions in the past year for a combined sum of $96 million. Sigma-Aldrich also made three acquisitions. PerkinElmer and VWR announced the most pure-play acquisitions during the past year with six each.

Among the technology areas with multiple acquisitions were cellular analysis and thermal analysis. Another flow cytometer acquisition besides Accuri was the purchase of Amnis by Merck Millipore (see IBO 8/31/11). Cell microscopy was the focus of acquisitions by GE Healthcare Life Sciences (see IBO 4/30/11) and FEI (see page 2). Both Mettler-Toledo and Waters added to their thermal analysis product lines with their respective purchases of Triton Technology and Anter (see IBO 7/31/11). Waters acquired Anter for $11 million. The company is expected to add $6 million in sales to Waters’s Thermal Analysis division.

Private equity firms also made a number of strategic acquisitions, building on recent investments in analytical instrument companies. Following Biolin Scientific’s acquisition by Ratos (see IBO 11/30/11), the companies acquired another Nordic firm, Sophion Bioscience (see IBO 7/15/11). With new private equity ownership (see IBO 9/30/10), Perten Instruments acquired TexVol Instruments (see IBO 9/15/11). This year, PNC Equity, which bought Wheaton in 2010 (see IBO 6/15/10), acquired two additional lab product companies (see IBO 2/15/11, 3/31/11).

Companies also made purchases to expand their presence in emerging markets, particularly in Asia Pacific and Latin America. Thermo (see IBO 12/15/10) and Danaher’s Hach business (see IBO 3/15/11) acquired companies serving Australia and New Zealand. Additionally, both companies cited an enlarged Asian presence as reasons for their respective purchases of Dionex and Beckman. VWR expanded its operations in China via an acquisition (see IBO 8/15/11). Meanwhile, Sigma-Aldrich (see IBO 5/31/11) and Pall (see IBO 7/15/11) acquired suppliers in Brazil.

Finally, several instrument and lab product companies continued to build their diagnostic businesses, most notably Thermo and QIAGEN—although in different parts of the market. While QIAGEN invested in molecular diagnostics and companion diagnostics, Thermo pursued a narrower approach, purchasing a strong franchise with the acquisition of Phadia (see IBO 5/31/11). Also adding to their diagnostic capabilities through acquisitions were Luminex, which purchased EraGen Biosciences (see IBO 6/30/11), and PerkinElmer, which purchased ID Biological Systems, which provides sample collection devices, for $7.7 million.

 Five Largest Pure-Play Instrument and Laboratory Product–Related Acquisitions in 2011 

 Purchaser                Acquired               Purchase Price ($M)    Acquired Co.'s Annual Sales ($M)

 Danaher                  Beckman Coulter        $6,800.0                 $3,700.0

 ThermoFisher Scientific  Dionex                 $2,030.0                 $460.0

 PerkinElmer              Caliper Life Sciences  $600.0                   $124.0

 Spectris                 Omega Engineering      $475.0                   $168.0

 ITT                      YSI                    $310.0                   $101.0

 Five Best Values in 2011 for Pure-Play Companies with Sales Over $10 Million 

 Purchaser                Acquired                     Purchase Price($M) Acquired Co's Annual Sales($M) Price-to-Sales Ratio

 Oxford Instruments       Omicron NanoTech-nology      $46.5              $54.1                          0.9

 ThermoFisher Scientific TKA Wasseraufbereitungssysteme$13.2              $14.0                          0.9

 SFW Partners            Spectro Inc.                  $20.5              $19.5                          1.1

 Bruker                  Center for Tribology          $13.0              $10.0                          1.3

 Vector Capital          RAE Systems                   $134.0             $87.1                          1.5

 Five Largest Premiums Paid in 2011 for Pure-Play Companies with Sales Over $10 Million 

 Purchaser               Acquired               Purchase Price($M)  Acquired Co.'s Annual Sales($M)    Price-to-Sales Ratio

 Becton Dickinson        Accuri Cytometers      $205.0              $20.0                              10.3

 Techne                  Tocris                 $124.0              $18.2                              6.8

 PerkinElmer             Caliper Life Sciences  $600.0              $124.0                             4.8

 ThermoFisher Scientific Dionex                 $2,030.0            $460.0                             4.4

 ITT                     YSI                    $310.0              $101.0                             3.1

 Bar Graph: Value of Five Largest Pure-Play Instrument and

 Laboratory Product-Related Acquisitions (Millions)

          Top 2–4    Top 1

 2009     $1,675     $1,500

 2010     $1,300     $7,000

 2011     $3,415     $6,800