The company hinted last week that it may be looking to make another acquisition, despite its prediction of a period of consolidation in the wake of its $714 million (€562m) takeover of Perbio last year. It strode back onto the acquisition trail yesterday with a $330 million agreement to buy the UK's Oxoid Group and an $80 million offer for Dharmacon of the US.
Oxoid, with revenues of $155 million, is one of the world's leading manufacturers of microbiological culture media and other products that test for bacterial contamination. The company's products are used in microbiology research laboratories and also in biopharmaceutical production and process validation. The market in which Oxoid participates is estimated to be growing at 5 to 10 per cent annually.
With sales of $17 million, Dharmacon is one of the pioneers in RNA technology, including RNA interference (RNAi) and small interfering RNA (siRNA). RNAi is a powerful tool for life-science research that is used to selectively block the activity of genes, allowing their function to be explored, and is one of the fastest moving areas in drug discovery.
Paul Montrone, Fisher's chief executive, said that the addition of Oxoid and Dharmacon gives the company "a $700 million life-science footprint."
"The acquisitions enable us to build on existing capabilities within our cell-culture and bioresearch businesses," he added, noting that Oxoid and Dharmacon's products will benefit from being promoted through Fisher's distribution channels. The company's turnover was $3.56 billion last year, up 10 per cent year-on-year.
Paul Meister, Fisher's vice chairman, said that adding Oxoid and Dharmacon would also improve the product mix at the company, with higher-margin, proprietary products increasing from 45 per cent to 50 per cent of total sales as a result. The company projects that operating margins will increase and be in the range of 8.7 to 8.9 per cent in 2004 and 9.1 to 9.3 per cent in 2005
Excluding estimated one-time costs of $15 million, Fisher expects the transactions to add 5-7 cents to earnings per share in 2004 and 10-15 cents in 2005. It said EPS should be in the $2.75-$2.87 range this year, rising to $3.30-$3.50 in 2005.
2004 revenue growth will be in the 13.5 per cent to 15.5 per cent range, with 3.5 per cent coming from the new acquisitions. The following year should see revenues rise 7.5-9.5 per cent.