The Rising Influence of Rising Affluence

[DewDiligence]

The impetus for the PKI-CALP acquisition (#msg-66915400) announced
yesterday is largely the growth of laboratory services in emerging markets.
PKI is one of my top-20 LTBH picks (#msg-66381289).

http://www.boston.com/business/healthcare/articles/2011/09/09/perkinelmer_to_buy_caliper_for_600_million/

›PerkinElmer to Acquire Caliper

By Robert Weisman
September 9, 2011

PerkinElmer Inc. yesterday said it has agreed to buy Caliper Life Sciences Inc. for about $600 million in a deal joining two Massachusetts companies that sell imaging and diagnostic products and services to biomedical and environmental science labs worldwide.

The transaction, which must be approved by Caliper shareholders and federal regulators, would be the largest in more than a decade for Waltham-based PerkinElmer. The company has made seven smaller acquisitions this year as the global life sciences sector consolidates.

Unlike many takeovers, where a company buys a competitor to gain market share and then slashes jobs, both parties in this deal say the combined companies’ work force is likely to expand in Massachusetts. Caliper, based in Hopkinton, sells a suite of molecular imaging and detection technologies that complement PerkinElmer’s products and services.

“Our customers will benefit from dealing with one company with broader capabilities,’’ PerkinElmer chief executive Robert F. Friel said in an interview, noting that his company hopes to supply a larger product line to labs opening up in developing countries.

“If you look at what’s happening in life sciences globally, you’re seeing many companies outsourcing to China and India,’’ Friel said. “It takes a lot of infrastructure to keep pace with the customer.’’

Caliper, for which PerkinElmer will pay $10.50 a share, will give the Waltham buyer a leadership position in the emerging market for genomic research tools, said Peter Lawson, a life sciences and diagnostics analyst for investment bank Mizuho Securities USA in New York. PerkinElmer has previously snapped up bioinformatics companies in that sector, allowing it to sell sophisticated software that helps researchers identify potential drugs.

“This better positions them in genomics research,’’ Lawson said. “It’s a high-end innovation area that requires a lot of capital.’’ PerkinElmer has skillfully built its roster of technology, software, and services that support genomics researchers pushing the frontier of personalized medicines, he said.

The purchase price represents a 42 percent premium over Caliper’s closing price of $7.39 on Wednesday. Caliper’s shares jumped $3.04, or 41.1 percent, yesterday to $10.43 on the Nasdaq Stock Market. Shares of PerkinElmer closed down 5.9 percent at $20.75, a loss of $1.30 on the New York Stock Exchange.

PerkinElmer said it plans to retain Caliper chief executive Kevin Hrusovsky and his management team as well as most of Caliper’s employees. The company has 464 workers worldwide, including about 250 in Massachusetts. PerkinElmer employs about 6,500 people globally, including 500 in its home state. While some Caliper administrative jobs may be eliminated, PerkinElmer could move other work to Hopkinton and expects to grow the operation there, Friel said.

The name Caliper is likely to live on as a brand on research products such as microfluidic chips, which Hrusovsky describes as “kind of like shrinking an entire laboratory onto a chip the size of a quarter,’’ though the company will be absorbed into PerkinElmer.

PerkinElmer and Caliper have competed with Waltham-based Thermo Fisher Scientific Inc., Waters Corp. of Milford, and other companies in the United States and abroad in the diagnostic, laboratory, and analytical equipment market.

Hrusovsky described Caliper as a research and science-oriented company that found it difficult to tap global markets on its own.

“PerkinElmer has infrastructure and 10 times as many salespeople around the world as we have,’’ he said. “This deal basically takes the best-kept secret, Caliper, and allows us to tell our story worldwide by combining with PerkinElmer.’’

Both firms take their names from other businesses once based out of state. Caliper was the name of a California company that acquired Hopkinton-based Zymark Corp. in a 2003 “reverse merger’’ that moved the acquiring company’s headquarters to Massachusetts. PerkinElmer, the name of an old-line Connecticut company, was among the assets acquired in 1999 by a Wellesley company then known as EG&G.‹