Bruker BioSciences (Billerica, Massachusetts) reported entering an agreement to acquire all of the stock of molecular spectroscopy company Bruker Optics (also Billerica) for $135 million, to be paid about 59% in cash and 41% in BRKR stock.
The cash component of the price will be funded from about $60 million of existing cash, and about $20 million from a planned revolving credit facility. Bruker BioSciences said it expects to have a cash balance of more than $40 million following the closing of the acquisition.
Bill Knight, CFO of Bruker BioSciences, in a morning conference call called the acquisition "a great addition" but "not primarily driven by synergy."
He said, "We already share many synergies, such as our common brand, co-located international offices, even before the acquisition. Nevertheless, in 2007 and beyond, we also expect additional synergies of one-to-two cents EPIS, primarily due to revenue growth synergies and certain expense synergies." He said also that no "major restructuring" is expected following deal close.
With completion, Bruker Optics will become a third operating company of Bruker BioSciences, in addition to Bruker Daltonics and Bruker AXS. Bruker Optics will continue to be managed by its present management team under President Dr. Dirk Laukien, who has led Bruker Optics for more than 10 years.
Excluding one time deal fees and expenses, the acquisition is expected to be immediately accretive to Bruker BioSciences' 2006 and 2007 EPS, and will improve its operating margin and cash flow profile.
Frank Laukien, president and CEO of Bruker Biosciences, predicted that the acquisition would create a life science and analytical systems company "with greater than $400 million of revenue in 2006, and with improved operating income and net income." He also predicted that creation of critical mass "in many of the markets we serve" would lead to greatly expanded financial strength and flexibility.
At the close of the call he said integration of the operations "will not disrupt any of the three operating companies and will be relatively seamless because of our shared business model and common set of values."
The combined company will have a broad range of mass spectrometry, X-ray analysis and molecular spectroscopy technology platforms to provide a combination of complementary systems for chemical and materials analysis, as well as for proteomics. It will be a leading provider of instrumentation and molecular analysis solutions for pharmaceutical and biotechnology research and development; proteomics and structural biology; small molecule chemical analysis and metabolomics; clinical proteomics, molecular imaging and microorganism identification; advanced materials research and nanotechnology; pharmaceutical Process Analysis Technology (PAT) and "pharma forensics"; food, beverage, feed and agricultural analysis; advanced and raw materials research and process analysis in the semiconductor, automotive, cement, metals and various other industrial markets' as well as homeland security and defense.
Bruker is a global provider of research, analytical and process analysis instruments and solutions based on Fourier Transform infrared (FT-IR) and near-infrared (FT-NIR), as well as on FT and dispersive Raman spectroscopy. Bruker Optics is the worldwide exclusive distributor of bench-top time-domain (or non-FT) nuclear magnetic resonance instruments manufactured by its affiliate Bruker BioSpin, not involved in this transaction.
Bruker Optics' molecular spectroscopy product lines are used in industry, government and academia for a wide range of applications, such as pharmaceutical, chemical, polymer and forensic analysis. It says that several newer applications areas, such as PAT in the pharmaceutical industry and the detection of counterfeit drugs, as well as food, feed and agricultural analysis.
In January Bruker Optics won the bid of the State FDA of the People's Republic of China for the potential purchase and delivery of more than 300 near-infrared spectrometers, valued at over $15 million, including applications and service support. These systems will be deployed across China for the detection of counterfeit drugs.
Bruker Optics is headquartered on the same campus as Bruker BioSciences, and has research and manufacturing facilities near Karlsruhe, Germany and Houston, Texas.
During the year ended Dec. 31, 2005, Bruker Optics recorded revenue of $78.7 million; income of $12 million; net income of $6.3 million; and net cash of $4.3 million, consisting of cash of $9.5 million and indebtedness of $5.2 million.
Frank Laukien said: "Over the last five years, Bruker Optics has more than doubled in revenue, while also steadily improving its margins and profitability. This acquisition will increase our 'critical mass' in many of the markets we serve . . . The Bruker Optics acquisition increases the size of our accessible markets by over $700 million per year."
Five members of the Laukien family, who presently own about 58% of Bruker BioSciences on an undiluted basis, also own 98% of the stock of Bruker Optics. The acquisition agreement was signed between Bruker BioSciences, Bruker Optics and all of the Bruker Optics shareholders. The five Laukien shareholders of Bruker Optics have agreed to accept various combinations of cash and Bruker BioSciences stock as payment for their Bruker Optics shares.
Frank Laukien has agreed to accept, as consideration for his 19.1% ownership of Bruker Optics, 80% BRKR stock and 20% cash.
After the closing, Bruker BioSciences will be led by Frank Laukien as president and CEO, Bill Knight as CFO and Dirk Laukien as senior vice president.
Bruker BioSciences is the parent company of Bruker Daltonics and Bruker AXS. Bruker AXS is a developer and provider of life science, materials research and industrial X-ray analysis tools. Bruker Daltonics is developer and provider of life science tools based on mass spectrometry and offers a line of nuclear, biological and chemical detection products for homeland security.