Eugene's Molecular Probes snapped up by industry giant.
Byline: Christian Wihtol The Register-GuardAfter spending nearly three decades building Molecular Probes Inc. into a biosciences powerhouse, the Eugene owners are selling the firm to industry giant Invitrogen Corp. for $325 million in cash.
Under the deal announced Wednesday, publicly traded Invitrogen would take over closely held Molecular Probes this fall.
The impact on the Molecular Probes headquarters in west Eugene, which has 240 employees, was not immediately clear.
Invitrogen Chief Executive Officer Gregory Lucier said he wants to keep and enlarge research and development and other related work at the Eugene labs and offices.
"We want to keep Eugene as a center of excellence ... and really expand it," he said. "We want to build it up to really develop great new technologies."
But he also said Invitrogen would integrate Molecular Probes' "back office" work with similar functions at Invitrogen in order to save money. Back-office work typically includes payroll, human resources and other administrative functions. It was not clear Wednesday whether that would mean job cuts in Eugene.
Jack Ball, Molecular Probes' chief commercial officer, said a team will decide that issue. "Ultimately, it will be what is best for the company," Ball said.
He added: "I believe the (Eugene) site will grow, at least from the R&D perspective."
Wednesday's deal will introduce a new, internationally prominent company into the Eugene area, and remove a local firm from local control.
Founded by Richard and Rosaria Haugland and owned by the Hauglands and their children, Molecular Probes is one of Eugene's premier private-sector employers. At its state-of-the-art labs and offices next to the Hynix computer chip plant, Molecular Probes has a fast-growing staff of highly skilled, highly educated, well-paid workers. The company has a research and development staff of 115 people.
The Hauglands last year hired a CEO - former Invitrogen executive Tony Martin - to help plan the firm's growth. At that time, the Hauglands talked about ways to sell the company and retire. Options included going public with an initial public stock offering.
But cash-strapped investors nationwide have been lukewarm about new stock offerings following the boom and bust of the 1990s.
Also, as Martin and the Hauglands examined going public, it became clear that even with an IPO, the Hauglands would have to hold onto a big stake in the company for five years or more, Ball said.
"It became a matter of, do you want cash now, or do you believe that things will continue for the next five years" and you can sell then, Ball said.
The Hauglands opted to sell now.
Molecular Probes talked with a number of potential buyers, but Invitrogen offered the best price and fit, Ball said.
Cash-rich Invitrogen is on a buying spree. Including Wednesday's deal, Invitrogen will have spent almost a half-billion dollars in seven months to buy new product lines.
Lucier, named CEO of Invitrogen in May, used a similar strategy to more than double sales as head of General Electric Co.'s GE Medical Systems unit.
Invitrogen several months ago bought Vertex Pharmaceuticals Inc.'s PanVera unit in Madison, Wis., for $95 million. It has kept that business in Madison.
``Not all the good ideas sit inside your company, so you're always on the lookout for the great technologies that are outside,'' Lucier told Bloomberg News. Invitrogen still has about $700 million in cash after the purchases, he said.
Molecular Probes has grown quickly in the past few years, as demand for its products has soared, and its R&D staff has added to the company's list of patents and products.
Molecular Probes is hugely profitable and has virtually no debt. It has an operating profit of 40 percent on its 2002 annual sales of $56 million, Invitrogen officials said. Molecular Probes' product catalogue is "the Bible" of the medical fluorescent dye industry, and Molecular Probes dominates the niche with more than 150 patents, Lucier said.
Molecular Probes "is a business that you just put the pedal to the metal more," Lucier said.
Invitrogen expects Molecular Probes' sales to hit $90 million in 2005.
Molecular Probes will generate $2.5 million in profit for Invitrogen in the final quarter of 2003 and $12.5 million in 2004, Invitrogen added.
Invitrogen officials repeatedly stressed they were impressed by Molecular Probes' Eugene R&D staff and the recently expanded and renovated west Eugene facility.
Invitrogen and Molecular Probes are evaluating whether Invitrogen will buy the facility, Ball said. The property is owned by RAM LLC, a Haugland family business.
CEO Martin, who has done much of the negotiating with Invitrogen, will leave Molecular Probes and return to his family in Britain once the sale is complete, Ball said.
Richard Haugland will stay with Molecular Probes as a consultant for a number of months.
Augie Sick, Invitrogen's vice president of business development, will head the Eugene business.
Invitrogen's stock soared Wednesday, rising 17 percent, to $45.09, on Invitrogen's comments that the deal would add 5 cents of earnings per share this year and 25 cents a share next year.
That left some analysts wondering whether Molecular Probes had sold for too little and handed a windfall to Invitrogen.
But Lucier said the price was fair, because a key element of the deal involves Invitrogen using its worldwide sales force to market Molecular Probes' products. Currently, only about a quarter of Molecular Probes' sales are outside the United States, Lucier said. He said he aims to double Molecular Probes' foreign sales.
Also, Invitrogen hopes to boost Molecular Probes' sales by pairing up Invitrogen and Molecular Probes' products, Lucier said.
Ball said the sale price was based on profit/sale-price ratios of other recent sales of biosciences firms.
INVITROGEN CORP.
Headquarters: Carlsbad, Calif.
Employees: 2,800
2002 results: $48 million profit on sales of $648 million
Founded: 1987
Business: Develops, makes, sells chemical kits to analyze and clone genes.
MOLECULAR PROBES INC.
Headquarters: Eugene
Employees: 240 in Eugene, 15 in the Netherlands
2002 results: Sales of $56 million
Founded: 1975
Business: Develops, makes, sells fluorescent dyes used in molecular research.
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| Title Annotation: | It's unclear what the sale means for the west Eugene facility and its 240 workers; Business |
|---|---|
| Publication: | The Register-Guard (Eugene, OR) |
| Geographic Code: | 1USA |
| Date: | Jul 3, 2003 |
| Words: | 1009 |
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