By Mary Welch
Although about 70 percent of their products overlap, Techne Corp. bought the primary assets of Genzyme Corp.'s research products business for $65.5 million.
The portion of Genzyme's research division that Techne, of Minneapolis, is acquiring recorded 1997 revenues of approximately $15 million. The product line includes recombinant proteins, antibodies and human, mouse and rat Elisa (enzyme-linked immunosorbent assay) research kits.
The purchase price breaks down to $24.8 million in cash, $17 million in Techne stock and estimated royalties of $23.7 million on Techne's biotechnology group sales for the next five years.
"For us, this is a refocusing issue, where we are going back to our core strengths," said Caren Arnstein, director of corporate communications for Cambridge, Mass.-based Genzyme. "We were assessing our products division and, while it was profitable, it was flat. And it's in a very competitive arena. We looked at building up the division through collaborations, acquisitions, partnerships — we were open to anything. But, in the end, we decided to sell."
She described Genzyme's core businesses as therapeutics, and surgical and diagnostic products.
The sale, which is more than four times the research products unit's sales, provides a "good return on investment to our shareholders," she added.
The research products unit was part of Genzyme's diagnostic division. That division will continue to develop, market and distribute in vitro diagnostic products, including clinical chemistry and immunochemistry products.
For Techne, the deal brings new products, expands its network of scientific contacts and improves manufacturing efficiency.
"About 70 percent of their products are similar to ours," said Kathy Backes, Techne's comptroller. "And 30 percent of their products are unique. Of those that are similar, we will look at the products and see which one is better. We will also be able to offer our larger product line to Genzyme's customer list."
Techne, through its biotechnology subsidiaries — R&D Systems, in Minneapolis, and R&D Systems Europe, in Abingdon, U.K. — targets basic and clinical research markets for cytokine and cytokine-related reagents and assays. The U.S. division is a specialty manufacturer of biological products, while the European side distributes biotechnology products.
Techne currently has about 8,000 biotechnology customers and 1,900 products, including 400 products introduced during its current fiscal year, which ends June 30.
Techne doesn't know how many of Genzyme's 4,000 customers overlap with Techne's because the acquirer can't look at the customer list until the deal closes July 1, Backes said.
Ninety Genzyme employees are affected by the move. Officials don't know how many will be laid off. Some Genzyme employees will be hired by Techne.
Genzyme's stock (NASDAQ:GENZ) closed Tuesday at $24.312, up $0.50. Techne's stock (NASDAQ:TECH) closed at $17, down $0.625. *