Affymetrix ($AFFY) took a big step forward in its pursuit of a larger swath of the market for cancer and immunology research products, announcing Wednesday that it has struck a deal to scoop up eBioscience for $330 million in cash. The pact comes after Santa Clara, CA-based Affymetrix, an early mover in the gene chip business, saw its revenues decline because of heavy competition in the gene expression microarray business, Xconomy reported.
To build on Affymetrix's genomics business, the buyout of San Diego, CA-based eBioscience gives the company new products such as flow cytometry and immunoassay reagents used in immunology, cancer research and diagnostics, according to the company. EBioscience, which is privately held, is expected to generate $70 million in revenue this year, and the purchase price is about 4.5 times its 2011 revenue. Analysts seemed to think this was a hefty price tag considering the value that the new business brings.
"While the valuation is a bit steep, especially for an asset that on the surface does not seem tremendously exciting, we believe this deal could fortify confidence in the outlook for a more diversified [Affymetrix]," Cowen analyst Doug Schenkel wrote in a note to analysts this morning. "If there was anyone who was thinking [Affymetrix] was going to reinvent itself as a growth story, this deal probably further dismisses the slim odds of that occurring."
Affymetrix's leadership, of course, put a different spin on the deal. "This transaction places Affymetrix at the forefront of immunology and oncology, two of the fastest growing segments of molecular and translational medicine," said Dr. Stephen P.A. Fodor, founder and chairman of Affymetrix, in a statement. "eBioscience complements our traditional businesses of genomics and cytogenetics, and dramatically strengthens our foundation in molecular diagnostics."
- here's the release
- read Xconomy's article