Managing Editor, Medical Device Daily
Electronics testing equipment maker Agilent Technologies said it agreed to acquire specialized life science research and diagnostic products maker Stratagene, of La Jolla, Calif., for about $245 million.
Each share of Stratagene common stock will be converted into the right to receive a cash payment of $10.94, which represents more than 28 percent premium to Stratagene's Thursday closing price of $8.51.
A special committee of Stratagene's independent directors received an opinion from its financial advisor, Houlihan Lokey Howard & Zukin, that the $10.94 per share price is fair from a financial point of view to Stratagene's stockholders.
The transaction is subject to certain closing conditions set forth in the merger, and stockholders representing about 59 percent of the outstanding common stock of Stratagene already agreed to vote in favor of the merger.
Stratagene will operate as a division within Agilent's life sciences solutions unit. The acquisition is expected to close within 90 days. It has major company locations in Garden Grove, Calif.; Cedar Creek, Texas; Edinburgh, Scotland; Tokyo; and Amsterdam, the Netherlands.
Stratagene's products are used by scientists in academia, government research and industry in molecular biology, genomics, proteomics, drug discovery and toxicology. Its portfolio includes reagents for life science research and instruments. The company also offers a range of diagnostics products, including applications for allergy testing and urinalysis.
Founded in 1984, Stratagene has grown to more than 400 employees and gained a Nasdaq listing in 2004 through its acquisition of Garden Grove, Calif.-based Hycor Biomedical Inc.
Following the merger, most of Stratagene's staff are expected to join Agilent, operating under its Life Sciences Solutions Unit, and Agilent will broaden its products and services with the addition of Stratagene's portfolio of reagents and diagnostic products. Among those are rights to more than 150 microRNA sequences available from Max Planck Innovation for the development and sale of its Molecular Diagnostic Kits. Stratagene obtained the last of four licenses in February.
Stratagene, which reported revenues of $24.7 million for the fourth quarter, posted a net income of $9 million, or 40 cents per share. The company ended the year with $42.9 million in cash, which was reduced in January by $10.8 million in connection with an out-of-court patent litigation settlement with Madison, Wis.-based Third Wave Technologies Inc. Following that payment, the company had a cash position of $32.2 million.
Stu Matlow, a spokesman for Agilent's life sciences solutions unit, said that the Stratagene acquisition "expands Agilent's footprint into the life sciences area and a lot of the reagents that Stratagene makes are very complimentary to the kinds of workflows that Agilent instruments are used in, it just seemed like a natural fit." He added that Agilent's genomics business "fits in nicely" with Stratagene's reagent business.
"Stratagene has a strong R&D team as well as excellent presence in the important academic and government markets," added Nick Roelofs, vice president and general manager of Agilent's Life Sciences Solutions Unit.
Matlow noted that there is very little overlap between the two companies' products and he doesn't see the need for the reduction of Stratagene staff or eliminating any of their current facilities.
As part of the arrangement, Joseph Sorge, CEO, chairman and founder of Stratagene and its largest stockholder, also reported that he has formed a new company to pursue molecular diagnostic applications. The new company will purchase for $6.6 million certain assets of Stratagene from Agilent immediately following the close of the transaction and will license from Agilent certain of their molecular diagnostic technologies.
Navigant Capital Advisors provided the special committee of Stratagene an appraisal of the assets to be purchased and technology to be licensed by the new company, and such arrangements were unanimously approved by the special committee of Stratagene's board of directors.
"I'm looking forward to having more time to focus on research and discovery and making a difference in human health care," Sorge said. "Our discussions with Agilent have been very friendly and cooperative, and we expect a smooth transition."
Agilent, based in Santa Clara, Calif., currently has about 19,000 employees, serves customers in more than 110 countries and had net revenue of $5 billion in fiscal year 2006.