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MINNEAPOLIS, June 23 /PRNewswire/ -- TECHNE Corporation (Nasdaq: TECH - news) announced today that Genzyme General (Nasdaq: GENZ - news) has agreed to sell the primary assets of Genzyme's Research Products business to TECHNE for approximately $65.5 million. The purchase price is comprised of $24.8 million cash, $17.0 million of TECHNE's common stock and estimated royalties on TECHNE's biotechnology group's sales for five years of $23.7 million.
Genzyme's Research Product's Business is a sophisticated catalog business offering more than 350 recombinant proteins, antibodies, and human, mouse, and rat ELISA research kits to more than 4,000 customers. Revenues from the portion of Genzyme's Research Products business which will be continued by TECHNE were approximately $15 million in calendar year 1997.
TECHNE Corporation, through its R&D Systems and R&D Systems Europe biotechnology subsidiaries, is the market leader in the basic research and clinical research markets for cytokine and cytokine-related reagents and assays. TECHNE currently has approximately 8,000 biotechnology customers and 1,900 products, including 400 new products introduced during its current fiscal year ending June 30, 1998. For the twelve months ended December 31, 1997, TECHNE's net sales were $63.5 million, of which $52.4 million related to its biotechnology business.
Thomas E. Oland, TECHNE's Chairman and Chief Executive Officer said, ''We are very pleased that Genzyme decided to sell TECHNE their research products business. In our research markets, they are highly respected for the quality of their products, customer and technical services, and marketing literature. This acquisition will provide R&D Systems with additional high-quality products and extend our network of scientific contacts and collaborations. The anticipated additional product volume should also improve our manufacturing efficiency and marketing and sales effectiveness.''
Genzyme General's diagnostics unit, of which the research products business was a part, will continue to develop, market and distribute in vitro diagnostic products, including rapid tests, clinical chemistry, and immunochemistry products.
''The sale of the research products business is a part of our strategy to focus on growth businesses consistent with our core competencies,'' said Henri A. Termeer, Genzyme Corp.'s Chairman and Chief Executive Officer. ''The diagnostic products business will focus on expanding its product portfolio and leveraging sales through our unique distribution network.''
The planned closing date for the transaction is July 1, 1998. During a July transition period, Genzyme will continue to service their research customers, while the business is being transferred to R&D Systems. Also, Genzyme will continue to manufacture Genzyme products for TECHNE for ninety days following the closing, while R&D Systems is gearing up to manufacture them.
TECHNE stated that as a result of the acquisition it expects its fiscal year ending June 30, 1999 earnings to be $0.06 to $0.12 per share less than its fiscal year 1998 earnings. The anticipated reduction in earnings is primarily attributable to the write-off of acquired inventories in two years and the amortization of the goodwill associated with the transaction within six years.
Oland stated that, ''Although the acquisition has a negative impact on first year earnings, in the long term we expect this transaction to have substantial positive effects on both revenues and earnings. Further, it will certainly establish R&D Systems as the world's leader in the cytokine research marketplace.''
This press release contains forward looking statements about the value of the transaction, expected closing and transition dates, royalties on product sales and the impact of costs of the transaction on fiscal 1999 earnings. The actual value, dates, projected royalties and impact on fiscal 1999 may differ materially based upon the abilities of the parties to complete required actions on scheduled dates, fluctuations in the market value of the TECHNE shares, and future sales levels, which will be dependent on TECHNE's ability to convert and retain Genzyme's customers and make sales from TECHNE's broader product line to former Genzyme customers.
TECHNE Corporation has two operating subsidiaries: Research and Diagnostic Systems Inc. (R&D Systems) of Minneapolis, Minn. and R&D Systems Europe Ltd. of Abingdon, England. R&D Systems is a specialty manufacturer of biological products and R&D Systems Europe is a distributor of biotechnology products.
Genzyme General develops and markets therapeutic and surgical products and diagnostic products and services. A division of the biotechnology company Genzyme Corp., Genzyme General has its own stock intended to reflect its value and track its performance.
SOURCE: TECHNE Corporation
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