By Mary Welch

Invitrogen Corp. will acquire Research Genetics Inc., a company that supplies products and serves for functional genomics and gene-based drug discovery research, for 3.2 million Invitrogen shares, which were worth $139 million based on Wednesday's closing price of $43.50.

The merger would combine San Diego-based Invitrogen's strengths in gene cloning, expression and analysis kits for functional genomics and proteomics with Research Genetics' concentration in genomics and services. The merger is expected to close at the end of January.

"It's a nice deal, both strategically and financially," Craig Parker, senior analyst with Donaldson, Lufkin, & Jenrette Securities Corp. in San Francisco, told BioWorld Today. "It puts Invitrogen into the new fast-growing area of expression analysis. Research Genetics has been a quiet company involved in microarray analysis."

In fact, Huntsville, Ala.-based Research Genetics offers microarrays of 30,000 different human genes, which it says is the world's largest collection of commercially available, sequence-validated clones.

Invitrogen's stock (NASDAQ:IVGN) gained $3.937, or 10 percent, on the news Wednesday to close at $43.50. The company went public in late February through the sale of 3.5 million shares at $15 per share. It acquired privately held Novex in June for 2.5 million shares, when its stock was at $21 per share. (See BioWorld Today, March 1, 1999, p. 1; and June 16, 1999, p. 1.)

Invitrogen reported about 16 million shares outstanding on Sept. 30. It completed a secondary offering of 2.4 million shares at $25 each in October.

"I like the deal," Robert Olan, an analyst with Hambrecht & Quist LLC in New York, told BioWorld Today. "Invitrogen has identified as a long-term strategy of acquiring a number of research product companies and it is one of the few public companies with the currency, the cache, the brand name to do it. There's a lot of little companies out there with nice products and profits that need to take the next step, which involves either broadening their product line or distribution. That's what Invitrogen offers.

A private company, Research Genetics had revenues of $23 million and a net income of $1.6 million when it closed out its fiscal year on June 30. Founded in 1987, it has been profitable ever since and currently employs 200 people. Its product lines include DNA microarrays and custom software for microarray data analysis, PCR primers that amplify all or a specific portion of selected genes, genetic markers, large-scale genomic and cDNA libraries, and custom-made DNA.

Invitrogen's marketing and sales capabilities will allow Research Genetics to expand outside the United States, "where we have a minimal presence today. It represents a particularly strong opportunity," Jim Hudson, president and founder of Research Genetics, said in a statement.

"Research Genetics is a little upstream from Invitrogen," Olan said. "Invitrogen's products put previously identified genes into a host system to get the host to highly express genes. Research Genetics helps identify which genes would be useful to put in that host."