By Lisa Seachrist
Looking to create the premier genomic discovery portal, Celera Genomics announced it would acquire bioinformatics specialist Paracel Inc. in a stock swap valued at about $283 million at the time the merger was made.
The Rockville, Md.-based Celera will purchase the Pasadena, Calif.-based Paracel with between 1.55 million and 2.26 million newly issued shares of Celera stock. The exact number of shares will be determined at closing and will be based on the market value of Celera stock.
At Tuesday's closing stock price (NYSE:CRA) of $106 - a rise of $5 - the deal would be worth as much as $239.5 million. The acquisition is subject to regulatory approval and is expected to close within the next couple of months.
"Paracel is one of the strongest bioinformatics companies out there today," said Peter Barrett, chief business officer and executive vice president for Celera. "They will really complement our efforts to turn our data into knowledge."
Paracel is a leading producer of advanced genomics and text analysis technologies. Its relationship with Celera began at Celera's inception in 1998. The company's products include the world's fastest sequence comparison supercomputer, GeneMatcher, high-throughput sequence analysis and annotation software tools, and a text search supercomputer, TextFinder.
With Paracel's technology, Celera will be able to provide added analytical and data-mining resources critical for Celera's customers to turn the company's mountain of genetic data into useful genomic knowledge. In addition, Barrett said Celera would use the tools for its own internal gene discovery efforts and annotation work.
Paracel's operations will remain in Pasadena when the acquisition is finalized. The company also will continue to provide hardware and software products to its current and future customers.
"We are going to continue our business - continue providing our products and expand our business," said Kwang-I Yu, founder, chairman, president and CEO of the privately held Paracel. "We think this is a pretty good fit. We are very excited with this deal. We think [Celera] is going to win."
Eric Schmidt, vice president with SG Cowen Securities Corp. in Boston, agreed Celera is likely to win in its efforts to become the world's leading supplier of genetic information, and this deal is one that will help the company on its way.
"I think this is a great acquisition," Schmidt said. " They are buying the leading bioinformatics company for what appears to be a very good price. Paracel's technology will help Celera and its customers search and annotate genomic information. It will allow them to make sense of the data Celera's been generating."
Doug Lind, vice president and analyst with Morgan Stanley Dean Witter of New York, admitted to not knowing a lot about the computing industry, but noted the acquisition provided Celera with necessary tools. "Celera is generating a tremendous amount of data and they've decided they would be better off having the informatics expertise in-house," Lind said.
According to Lind, the Paracel acquisition is far from the last for Celera, which recently acquired a gene function software technology known as Panther from Molecular Applications Group, of Palo Alto, Calif., and established a significant equity share in the genomics service company, Shanghai Genecore BioTechnologies Co. Ltd. in China.
Schmidt agreed the acquisition was likely to be followed by other purchases.
"I expect to see Celera use its stock currency to acquire other technologies," Schmidt said. "I could see them adding functional genomics capabilities and perhaps an e-health company. They are going to be a very big company in the healthcare space."
Barrett acknowledged Celera would pursue technologies via acquisitions and strategic partnerships as the need and opportunities arise. "We are always looking for partners and acquisitions that can create overall value for the company," Barrett said.
Celera Genomics is one of two operating groups of PE Corp., of Foster City, Calif. PE Biosystems Group, also of Foster City, comprises the other arm of PE Corp.
Celera recently raised $855 million in a public offering to focus on functional genomics, proteomics and personalized medicine. It also will be an early customer for the Invader technology to speed the discovery and understanding of single nucleotide polymorphisms. PE Biosystems acquired the technology from Madison, Wis.-based Third Wave Technologies Inc. in January. PE also formed a proteomics research center earlier this month, which will be available to Celera. (See BioWorld Today, March 2, 2000, p. 1; Jan. 25, 2000, p. 1; and March 16, 2000, p. 1.)