Caliper Technologies has announced its intention to acquire laboratory automation, liquid handling and robotics specialist Zymark in a deal valued at around $71 million (€61m) in cash and stock. Zymark has a strong position in drug discovery screening, stability testing and quality control functions in the life sciences industry.
Under the terms of the agreement, Caliper will pay $57 million in cash and contribute 3.15 million shares of its common stock to get control of Zymark, which had revenues in 2002 of $65.4 million. The acquisition, in which Zymark will become a wholly owned subsidiary of the Caliper group, will add to Caliper's earnings in 2003. The deal also provides for an additional stock component of up to 1.575 million if specified targets for sales of Zymark products are met in 2003 and 2004.
Investors did not seem to respond well to the news, however, and Caliper's Nasdaq-listed shares ended the day down more than 10 per cent to $4.46. Earlier this year, Caliper itself had to fend off a takeover bid of $110 million from Little Bear Investments, which specialises in buying vulnerable companies; the company's burn rate is currently running at around $35 million a year and at this level its cash reserves would last just over two years.
"Given Zymark's 2002 revenues of $65.4 million, we now have a target for Caliper to be profitable by year-end 2005," James Knighton, Caliper's chief financial officer, told a conference call.
Once the deal is completed, Caliper's headquarters will be in Hopkinton, Massachusetts and Zymark's chief executive, Kevin Hrusovsky, will become the new CEO. Caliper's current CEO, Michael Knapp, will become chief technical officer of the new entity, while Knighton will retain his role as CFO during the transition period and Dan Kisner will remain as Caliper's chairman.
"The acquisition will allow Caliper to leverage its rich microfluidic LabChip technology and product discovery engine with Zymark's proven substantial commercial organisation focused on laboratory automation," said Caliper in a statement. Hrusovsky said that the combination of Caliper and Zymark's technologies will allow the group to target new areas, such as analytical biochemistry, diagnostics, genetic analysis and genomics/proteomics.