By Frances Bishopp
Perkin-Elmer Corp. and PerSeptive Biosystems Inc. signed a merger agreement in which Perkin-Elmer will acquire PerSeptive for $13 per share in a stock exchange worth approximately $360 million.
Perkin-Elmer, of Norwalk, Conn., which develops and markets scientific analytical instruments as well as systems for life sciences applications, and PerSeptive will combine PerSeptive's bioanalysis technology with Perkin-Elmer's technology and expertise in genetic analysis systems as well as liquid chromatography/mass spectrometry and protein sequencing.
The combined company will offer a portfolio of products that will allow its customers to reduce the time and cost of pharmaceutical drug discovery and development.
Terms of the agreement, which have been approved by both boards of directors, structure the deal as a tax-free merger in which shares of PerSeptive stock will be converted into shares of Perkin-Elmer stock at an exchange rate equal to $13 divided by the average closing price of Perkin-Elmer stock on the New York Stock Exchange during the 20 trading days ending on the second trading day prior to the merger.
PerSeptive's stock (NASDAQ:PBIO) closed Monday at $12.438, up $1.812. Perkin-Elmer (NYSE:PKN) ended the day at $78.688, up $0.625.
Perkin-Elmer's strength has been in technologies that study DNA, whereas PerSeptive's strength has been in technologies to study proteins as well as in small molecule drug discovery, Noubar Afeyan, chairman and CEO of PerSeptive, told BioWorld Today.
Afeyan said the new company, in his opinion, will hold the technology keys to the future of biotechnology.
"We think we are sitting in a very strategic link in this overall industry," Afeyan said. "With access to Perkin-Elmer's financial and distribution resources, PerSeptive can continue what it is has been doing, but better."
PerSeptive, of Framingham, Mass., has approximately 22.5 million outstanding shares, which, together with certain options and warrants, will convert into Perkin-Elmer stock.
The deal will be concluded, Afeyan projects, sometime in late November or early December. The transaction between the two companies is subject to antitrust regulatory clearance, approval by holders of a majority of PerSeptive's common stock and other conditions. No vote of Perkin-Elmer shareholders is required.
"We have no way of knowing what the price of Perkin-Elmer shares will be in November," Afeyan explained, "so there is a range of Perkin-Elmer's share prices of between $67.50 and $87.50. If their share price is anywhere in that range, the formula will be $13 divided by the price at which the stock is for that 20 days."
Afeyan said PerSeptive has developed technologies by which researchers are studying the emerging field of proteomics, the large-scale study of protein expression and protein networks. "The only way of doing that today is by using our mass spectrometers," Afeyan said.
PerSeptive's mass spectrometry is an analytical technique for accurate determination of molecular weights, the identification of chemical structures, the determination of composition of mixtures and qualitative elemental analysis. A mass spectrometer allows scientists to analyze infinitely small samples, fragile proteins and complex oligonucleotides by generating ions of sample molecules, separating the ions according to their mass-to-charge ratio and measuring the relative abundance of each ion.
PerSeptive also has technologies in protein purification (PerSeptive's Perfusion Chromatagraphy) and synthesis of DNA and peptides.
"We are offering these products to the market," Afeyan said. "Perkin-Elmer is offering complementary products in the DNA sequencing area, the polymerase chain reaction [PCR] area, and the gene expression analysis area," Afeyan said. "When the customer sees this broad spectrum of products and technologies integrating into solutions with common information and strategies, we think this will be of tremendous value to the biomedical research."
PerSeptive has less than a 4 percent equity stake in Millennium Pharmaceuticals Inc., of Cambridge, Mass., brought about last year when Millennium acquired ChemGenics Pharmaceuticals Inc., of Cambridge, Mass., in an exchange of stock valued at nearly $90 million.
ChemGenics was originally formed through a combination of Myco Pharmaceuticals Inc., a Cambridge-based microbial genomics firm, and PerSeptive's drug discovery group.
Since its public offering in 1992, PerSeptive has grown to nearly $100 million in revenues and more than 550 employees. The company has regional offices in Europe and Japan, a network of distributors in more than 35 countries and five manufacturing locations in the U.S. and Europe.
Perkin-Elmer is a $1.2 billion sales company, half of which is derived from the life sciences market. Perkin-Elmer introduced the first commercial systems for automated protein sequencing, DNA sequencing, and PCR and DNA synthesis.
The company, Afeyan said, will remain in Framingham, and no layoffs are expected. "The combined life sciences business of what we do and what they [Perkin-Elmer] do in the last 12 months has product sales of some $750 million and is growing at a rate of 20 percent," Afeyan said.
As life science researchers increasingly use genomics to understand disease at the genetic level (molecular medicine), it's clear this information must be complemented with technologies for the study of proteins, Afeyan said. *