By purchasing a laboratory automation and robotics company for $57 million in cash and 3.15 million shares, Caliper Technologies Inc. believes it can enrich its infrastructure, commercialize some of its own innovations and increase its partnership opportunities.
Nearly three years ago when Caliper raised $105 million through the sale of 2.3 million shares of its common stock, company officials told investors they would look to acquire a company or two. In Zymark Corp., Caliper found a company with the right characteristics for the right price, James Knighton, Caliper's president and chief financial officer, told BioWorld Today. (See BioWorld Today, Sept. 1, 2000.)
Zymark's laboratory automation, liquid handling and robotics solutions for life sciences aren't the only attributes Caliper, a microfluidic lab-on-a-chip technology company, has its eyes on, Knighton said. With its three-man sales force, Caliper, of Mountain View, Calif., stands to gain quite a lot through the Zymark merger.
"We've got a lot of cash and a tremendous amount of intellectual property. We're in the process of transforming ourselves from a technology company to a commercial company, but we don't have a strong commercial infrastructure - we have three sales reps," Knighton said. "What we've learned is it takes a fairly large commercial organization or at least a strong commercial organization to get any product out there, certainly new revolutionary products."
Caliper designs, manufactures and commercializes LabChip devices and systems that enable experiments on a chip that ordinarily require laboratories full of equipment and people. The LabChip is meant to streamline and accelerate experimentation. Meanwhile, Zymark designs and installs robotic systems and workstation-based automation products for use in the research and analytical laboratory environment.
Not only are Zymark's salespeople highly trained, they also call on the same type of customer Caliper would target.
"I believe that the integration of resources within our two companies will enable expansion of next-generation technologies into new customer segments and new markets, such as biological systems, proteomics and genomics research, genetic analysis, analytical biochemistry and diagnostics, ultimately benefiting the industry, academia and the patient," Kevin Hrusovsky, CEO of Zymark, said in a prepared statement. "With the completion of this transaction, I look forward to sharing my vision for Caliper and for current and expanded customer opportunities." (Hrusovsky will continue as CEO and will join the company's board of directors.)
For all this plus Zymark's technology, Caliper will pay The Berwind Company LLC, the holding company that owns Zymark, $57 million and 3.15 million shares of common stock, which were valued at $15.7 million when the market closed Friday. Knighton said there are restrictions on trading the stock.
Caliper's stock (NASDAQ:CALP) closed Monday at $4.46, down 52 cents, or 10.4 percent.
The agreement also provides for a potential additional earn-out stock component of up to 1.575 million shares of Caliper stock if specified targets for sales of Zymark products are met in 2003 and 2004. The deal is expected to close in the third quarter.
By purchasing Zymark, Knighton said Caliper's revenue line will be boosted while its burn rate will be reduced.
Zymark's revenues for 2002 were $65.4 million. The company lost $100,000 and recorded a one-time $5 million asset impairment.
Caliper, on the other hand, had $144 million prior to the Zymark acquisition and 24.7 million outstanding shares.
"The acquisition also gives Caliper and its shareholders some visibility, for the first time, into the profitability date for the company. Our target is to turn profitable by the end of 2005," Knighton said.
Founded in 1995, Caliper has 220 employees, mostly in California, while Zymark has about 350 employees in the Boston area and other cities worldwide. When the companies begin consolidating, Knighton said there may be a work force reduction, but was not prepared to discuss that Monday.
Zymark will become a wholly owned subsidiary of Caliper, and will continue to sell products under its own name.