Affymetrix Closes eBioscience Deal - Analyst Blog

On June 25, genetic products maker Affymetrix Inc (AFFX) completed its acquisition of eBioscience Holding Company, Inc. for $315 million in cash. The payment was partly financed through available cash resources and partly by a public offering of senior notes. eBioscience is now a fully-owned subsidiary of Affymetrix.

Also, Affymetrix’s Compensation Committee agreed to issue about 1.32 million shares from its common stock as equity incentive awards to encourage 278 eBioscience employees to join the company.

San Diego, California-based eBioscience has been a global leader in immunology and oncology flow cytometry reagents offering a vast selection of antibodies, enzyme-linked immunosorbent assays (“ELISAs”) and proteins for life science research and diagnostics. eBioscience has also been an industry leader in flow cytometry (a technique for analysing microscopic particles) and immunoassay reagents for immunology and oncology research and diagnostics.

The acquisition is expected to significantly boost Affymetrix’s foothold in the fast-growing immunology, oncology and translational medicine markets, representing an annual opportunity of more than $2.5 billion. It will diversify the company’s revenue base, expand its product range (to include a vast array of reagents) and reinforce its growing molecular diagnostics business.

Management believes that the merger will increase the company’s operating income and gross margin in fiscal 2012. Besides expanding its global reach, Affymetrix aims to exploit cross-selling opportunities and invest in research and development (“R&D”) to develop new products using eBioscience’s technology.

Affymetrix is a leading provider of microarray-based products and services to the global research community. Along with Illumina Inc. (ILMN), it is one of the two major providers of microarray technologies, primarily used in the field of genetic research.

The company, however, needs to successfully integrate its acquisitions so that they do not turn out to be a waste. Affymetrix is operating in an intensely competitive industry and faces risks associated with lower R&D spending by its customers due to a soft economy and government actions including budget cuts.

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