Qiagen NV, of Venlo, the Netherlands, acquired privately held synthetic DNA manufacturer Operon Technologies Inc., of Alameda, Calif., for approximately US$110 million in a stock-based deal.
Peer Schatz, chief financial officer at Qiagen's principal operating subsidiary in Hilden, Germany, said the acquisition, the company's biggest to date, would yield a 13 cent earnings per share increase next year. Operon earned US$1.3 million net income on sales of US$13.3 million in 1999, and had expected to post US$20 million in revenues in the current year. Qiagen will incur transaction charges of US$4 million, equivalent to 11 cents per share, in the current fiscal year.
Schatz said he expects to see benefits both from the integration of the companies' products and of their respective sales and marketing operations. "That's really the beauty of this. They lacked sales and marketing and an international presence, both of which we have."
Qiagen's 400-strong sales and marketing team is ranked in the top two or three in the life sciences supply sector, he said, whereas Operon's sales force comprised just five people. They will take on key account management roles in the enlarged company, targeting high-throughput genomics and diagnostics centers. The combination will enable Qiagen to offer customers an end-to-end product set for nucleic acid extraction, separation and purification through sequencing, SNP analysis and microarrays, he said.
Operon competes with Life Technologies Inc., of Rockville, Md., for primacy in the synthetic DNA market, Schatz said. The company, he said, is the "outright leader" in the modified oligonucleotide space.
Deutsche Bank AG, of Frankfurt, Germany, responded positively to the deal, with a buy recommendation. "The highly synergistic deal represents another step in Qiagen's aggressive strategy to enter the rapidly growing genomics market segment and to extend its product line," it said in a research note. "It adds perfectly well to Qiagen's acquisition of Rapigene and collaboration with Zeptosens earlier this year. The size of the synthetic DNA market segment is around US$200 million and growing [by] approximately 40 percent per annum."
Qiagen will issue about 715,000 shares in exchange for Operon's outstanding stock. It expects the transaction to close in the second or third quarter.