Creating what could be a one-stop shop for biopharmaceutical customers, Millipore Corp. is acquiring Serologicals Corp. in a transaction worth $1.4 billion.

Atlanta-based Serologicals has long supplied consumable biological products, enabling technologies and services to support biological research, drug discovery and bioprocessing of therapeutic products. Likewise, Billerica, Mass.-based Millipore offers services to optimize the development and manufacturing of biologics. But together, they will have a broader range of products to offer, including Millipore's lab water and life science filtration capabilities and Serological's cell culture supplements.

"This is an exciting and transformational transaction for Millipore," said Martin Madaus, the company's chairman, president and CEO. "It will greatly strengthen our position as one of the leading franchises in the life sciences market and enhance our ability to build long-term shareholder value."

In terms of revenues, the combined company will become the number three player in life science consumables behind Fisher Scientific International Inc., of Hampton, N.H., and Sigma-Aldrich Corp., of St. Louis. Annual revenues of the joined companies are expected to be $1.4 billion, based on 2006 full-year projections.

Under the agreement, Millipore will acquire all 44 million shares of Serologicals' common stock for $31.55 per share in cash, and Serologicals' 1,000 employees will join Millipore's 4,800-person worldwide work force. The acquisition was not something Serologicals was seeking or had planned, said Bud Ingalls, vice president of finance and chief financial officer for Serologicals.

"Clearly, the company was not for sale," he told BioWorld Today. "We had gotten to know Millipore, just like we know a lot of people in our space, and they got to know us a little better. And then the parties said, 'Maybe, if we put these companies together, it would make sense for the shareholders, for the employees, for the customers.'"

It was a decision that Wall Street applauded. Serologicals' stock (NASDAQ:SERO) shot up $7.87 Tuesday, or 33.6 percent, to close at $31.15, whereas Millipore's stock (NYSE:MIL) rose $5.96, to close at $75.25.

While the boards of both companies approved the agreement, the transaction still requires approvals from regulatory authorities and Serologicals' shareholders. Closing is expected by June 30.

By bringing Serologicals on board, Millipore is strengthening its bioscience division, gaining leading positions in drug discovery products and services, antibodies, cell biology reagents and stem cell research. It plans to use its global direct sales force to increase sales of Serologicals' products in Europe, Asia and Japan. Its bioprocess division also gains Serologicals' cell culture supplements, making Millipore the only company in the industry to offer both upstream cell culture and downstream separation offerings for biopharmaceutical production.

Ingalls said the acquisition strengthens Serologicals' sales and marketing group, as well as its manufacturing capabilities.

"There's virtually no overlap [of products], so that's very encouraging," he said, "but it's complementary in the whole biomedical pipeline. We have different spaces we occupy. Putting them together makes a very strong company."

Madaus said Serologicals has "done a great job in running a highly productive R&D operation." It launched 1,700 new products in 2005 and is able to command a higher revenue per new product - $8,500 - than it could a few years ago in 2003: $5,797.

The acquisition will help Millipore reach its goal of doubling in value by 2009.

"It provides critical mass and size in order [for us] to be a more strategic supplier for our customers," Madaus said, adding that Serologicals' "strong profitability will enable us to improve our earnings per share already in 2006 and 2007."

Serologicals reported $275 million in revenues in 2005, representing a 16 percent organic growth rate from the year before. It had non-GAAP earnings per share of 98 cents. Founded in 1971, the company went public in 1995 and existed mainly as a therapeutic plasma company until early 2000 when a new management team, including its current president and CEO, David Dodd, transformed it into a life sciences company. Dodd will depart the company following the company's transition into the Millipore organization.

It is Millipore's decision as to whether Serologicals will be completely absorbed into the larger organization or exist as a separate unit, Ingalls said. "Serologicals, as a name, is really a throwback to when we were a plasma company," he added, "so frankly, it doesn't fit long term."

Serologicals reported first-quarter results Tuesday of $55 million in revenues, 8 cents in diluted earnings per share, and 14 cents in pro-forma diluted earnings per share.

Millipore had revenues of $991 million in 2005, which represents organic growth of 10 percent, Madaus said. By acquiring Serologicals, the company should notice between $9 million and $10 million in cost savings and synergies in 2007, he added, and between $15 million and $17 million in 2008.

The company will fund the acquisition with cash on hand and through a financing from New York-based UBS Investment Bank, which is acting as Millipore's exclusive financial adviser with the transaction. JP Morgan Securities Inc., also of New York, is acting as Serologicals' adviser.