Shareholder approval in hand, Harvard Bioscience Inc. on Friday closed its merger agreement to complete the acquisition of Genomic Solutions Inc.

"Harvard Bioscience is a tools-for-drug discovery company," Harvard President and Director David Green said. "Within the tools area, which is a very broad space, we like to focus on the bottlenecks in drug discovery. There are really three of those that we've focused on - target validation, assay development prior to high-throughput screening, and ADMET [absorption, distribution, metabolism, elimination and toxicology]. The Genomics Solutions product line really fit those very well."

The purchase, originally valued at about $26 million when first reported three months ago, was lowered to about $18 million given Harvard's Thursday closing per-share price of $2.79. The deal involves 3.2 million Harvard shares and $9 million cash.

Each share of Ann Arbor, Mich.-based Genomic Solutions' common stock, now delisted from NASDAQ, was converted into the right to receive 0.1017 of a share of Harvard common stock, or about 28 cents, and about 29 cents in cash. Based on its quarterly statement for the period ended June 30, Genomic Solutions last reported 31.2 million shares outstanding.

Originally based on Harvard's $5.34 closing price on July 17, when the companies entered a definitive merger agreement, the deal valued Genomic Solutions at about $26 million.

Green said the deal concluded with just over 30 million Harvard shares out, making Genomics Solutions' shareholders the owners of about 10 percent of the combined company. For the period ended June 30, Harvard reported $27 million in cash and equivalents.

Holliston, Mass.-based Harvard, which develops drug discovery research tools, views Genomic Solutions as a synergistic fit given the latter firm's positions in proteomics, high-throughput screening and DNA microarray systems.

"They have three main product lines," Green said. "Two are in the sample preparation area - one is sample preparation prior to mass spectrometry, clearly the main instrumentation of choice in proteomics. We think that's a very strong product line with good growth potential."

He also pointed to budding growth generated by a nanoliter-dispensing product line. Other products provide for high-speed, noncontact assay preparation for high-throughput screening; and high-fidelity microarray processing and analysis.

"Sample preparation appears to be the bottleneck, not the reading itself, just like in mass spectrometry," Green said. "It's not the mass spectrometry itself that is the bottleneck these days - those instruments are very fast. It's the sample preparation prior to the mass spectrometry. So those very nicely address the bottlenecks in drug discovery' theme."

Jeff Williams will remain president of Genomic Solutions, which will operate as a wholly owned subsidiary of Harvard.

Harvard, which said it has achieved a compounded annual growth rate of 38 percent, expects the acquisition to help the trend continue. Harvard said that for the 2002 fourth quarter, it expects Genomic Solutions to add about $5 million in revenue and to be accretive to pro forma earnings per share, though at less than 1 cent per share.

"From a financial point of view, we felt that, after the July restructuring, we could get [Genomic Solutions] to meet our operating margin targets of reaching 20 percent operating margin within about 18 months to two years," Green said.

In its last quarterly report, Genomic Solutions reported revenue growth of 35 percent to $6 million, up from $4.5 million for the second quarter last year. The company attributed the uptick to increased sales of its latest high-throughput screening product offering, as well as higher sales of its proteomic instrumentation and consumable products.

Harvard's shares (NASDAQ:HBIO) closed Friday up 19 cents at $2.99.