Just a follow up on the Techne purchase of the Genzyme products (article below). BIOI management said that Techne fired all the Genzyme salespeople and the BIOI had talked to several. They noted that sales will go with salesmen in some cases, but made no comments on whether they would hire any of the laid off GENZ salesforce.
Also note Techne paid 4 times revenues for the products they bought - on a valuation basis if they bought BIOI for four times sales we would be talking $10-11 a share - about where you note a 20 PE on 50 cents earnings gets us.
BIOI management is not making any strategic changes due to this acquisition at this time, and does not expect any big changes other than now they will have one competitor where in the past they had two.
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Joe
Copyright 1998 Star Tribune
Star Tribune (Minneapolis, MN)
June 24, 1998, Metro Edition
HEADLINE: Techne to acquire research products unit from Genzyme; $ 65.5 million deal will expand customer base, improve manufacturing efficiency
BYLINE: Melissa Levy; Staff Writer
Minneapolis-based Techne Corp. said Tuesday it will buy the research products division of biotechnology firm Genzyme Corp. for roughly $ 65.5 million.
The purchase price of the Genzyme unit includes $ 24.8 million in cash, $ 17 million in Techne common stock and an estimated $ 23.7 million in five years of royalties on Techne's biotechnology group sales.
The deal, expected to close July 1, will expand Techne's customer base and add some new products to the line of proteins and antibodies the company makes and sells to research scientists. The products are used for biotechnology research, such as studying how cancer spreads in cells.
Techne currently offers 1,900 products to about 8,000 customers. The Genzyme division, based in Cambridge, Mass., has more than 4,000 customers and 350 products.
The acquisition will increase Techne's 35 percent share of the cytokine research market to 50 percent, controller Kathy Backes said.
Techne is acquiring customer lists, inventory and some equipment from the Genzyme unit, but no production facilities.
In a prepared statement, Techne Chairman and CEO Thomas Oland said that the deal will "improve our manufacturing efficiency and marketing and sales effectiveness."
Techne posted sales of $ 63.5 million in 1997, with $ 52.4 million of that related to its biotechnology business. Genzyme's research products division had sales of $ 15 million last year.
The purchase price, which could total more than four times the revenue of the Genzyme unit, is not unusual in the industry, said Douglas Eayrs, a health care analyst who follows Techne for John G. Kinnard & Co. in Minneapolis.
"This removes one of Techne's primary competitors from the market," Eayrs said.
Techne officials said the acquisition would cause the company to report fiscal 1999 earnings of 6 to 12 cents a share less than for fiscal 1998, which ends Tuesday. They attributed the decrease to the write-off of acquired inventories and the amortization of good will.
Eayrs raised his fiscal 1999 revenue projection for Techne by $ 13.5 million, to $ 88 million, because of the planned acquisition. He also predicted that company earnings will rebound in fiscal 2000.
"I think this is a good strategic move in the long term," Eayrs said.
Techne made a similar acquisition in 1991, buying the research products business of Amgen Inc. in California.
On Tuesday, Techne's stock closed at $ 17, down 62 cents.
The company has 350 employees in Minneapolis and 45 in England and Germany.It hasn't determined whether it will bring on any of the 89 workers in the Genzyme unit, Backes said. |
