BioWorld International Correspondent

LONDON - Genetix Group plc, a manufacturer of equipment for genomics and proteomics research, is acquiring Applied Imaging Corp. in an all-cash transaction valued at £9.6 million (US$18.3 million)

New Milton, UK-based Genetix will pay $3.06 per share, with the transaction expected to close in the fourth quarter. The money comes from the company's existing resources.

Applied Imaging specializes in prenatal genetic testing and cancer diagnosis, using systems it has developed for detecting cells that occur at extremely low levels and then identifying them with proprietary cell analysis software. The company is part of a European Union collaborative project, Dismal, that is developing a way of detecting metastasizing cancer cells.

Mark Reid, founder and CEO of Genetix, said the acquisition will strengthen the company's position in both the drug discovery and clinical diagnostics markets. "The expanded product portfolio, as well as Applied Imaging's strength in the key U.S. market, will help with cross-selling opportunities and an improved level of support for our customer base."

Genetix was one of the leading suppliers of equipment to the Human Genome Project and has since branched out into the analysis of disease processes and applying its technology to selecting protein targets for drug discovery.

Robin Stracey, president and CEO of Applied Imaging, said Genetix's capabilities were very complementary, with synergies and the prospects for enhanced competitiveness of the combined company. "We believe this is the right path for our stockholders, our customers and our employees."

Applied Imaging, based in San Jose, Calif., and Newcastle, UK, had revenues of $20 million in 2005, with a pre-tax loss of $900,000. In the first half of the year, revenues were $9.9 million, with a loss of $400,000. Genetix, meanwhile, had sales of £6 million in the six months to June, with pre-tax profits of £1.2 million.

Apart from accessing Applied Imaging's technology, the deal provides Genetix with an expanded U.S. sales force, and there are corresponding opportunities for increasing sales of Applied Imaging's products in Europe.

Genetix listed on the main market in London in November 2000, but subsequently moved its listing to the Alternative Investment Market (AIM) in June 2006. The company said AIM provided a more flexible environment for transactions and offered reduced costs and formalities.