Invitrogen to Acquire Applied Biosystems

Invitrogen Corporation and Applera Corporation announced that their Boards of Directors have approved a definitive merger agreement, under which Invitrogen will acquire all of the outstanding shares of Applera’s Applied Biosystems Group in a cash and stock transaction valued at $6.7 billion.

This strategic combination will create a global leader in biotechnology reagents and systems generating approximately $3.5 billion in combined sales, with significant commercial, operational and technical scale, uniquely positioned to accelerate and drive new discoveries and commercial applications. The combined company will have a major presence in key growth markets and exceptional technical capabilities in the areas of genetic analysis, proteomics, cell biology and cell systems. Following the close of the transaction, the combined organization will be named Applied Biosystems, Inc. and will have its corporate headquarters in Carlsbad, California.

Under the terms of the merger agreement, Applera-Applied Biosystems shareholders will receive $38 for each share of Applera-Applied Biosystems stock they own in the form of Invitrogen common stock and cash. The expected split between cash and stock is 45% and 55%, respectively. Applera-Applied Biosystems shareholders will receive a value of $38 a share if the 20 day volume-weighted average price of Invitrogen common stock is in the range of $43.69 – $46 three business days prior to the close of the transaction. The total value per share will differ if Invitrogen’s 20 day volume-weighted average price is above or below that range, measured shortly prior to the close of the transaction. The consideration represents a premium of 17% to Applied Biosystems’s closing price on June 11, 2008, or 12% to Applied Biosystems’s average closing price in the last 30 trading days. Applera-Applied Biosystems shareholders also will have the option to request all cash or all stock, subject to possible proration. Upon completion of the transaction, Invitrogen shareholders will own the majority of the company.

The combination is expected to be neutral to slightly accretive to Invitrogen’s earnings per share the first year after close and significantly accretive in year two. Following the closing of the transaction, the Board of Directors of the new company will be composed of the nine current Invitrogen Board members and three additional members from the current Applera Board. Gregory T. Lucier will be Chairman and Chief Executive Officer of the combined company, and Mark P. Stevenson will become President and Chief Operating Officer.

“This transaction combines the industry’s premier consumables provider with the industry’s premier systems provider to create a world-class biotechnology tools company,” said Mr. Lucier, Chairman and Chief Executive Officer of Invitrogen. “With this acquisition, we are nearly doubling our consumables business as almost half of Applied Biosystems’s revenues are consumable in nature. It also provides significant value creating opportunities for customers, shareholders and employees alike.”

Mr. Lucier continued, “We expect to realize the benefits of this transaction quickly and efficiently with an integration roadmap that will focus on creating maximum value for the combined company. We are highly confident in the ability of the talent in the combined organization to deliver on our plans. Until the closing date, employees of each company will operate in a ‘business-as-usual’ mode to ensure continued execution of both Applied Biosystems’s and Invitrogen’s commitments.”

Tony L. White, Chairman and Chief Executive Officer of Applera, said, “The Applera Board, with the assistance of its independent financial advisors, has thoroughly reviewed a range of strategic alternatives. We are pleased this transaction provides attractive immediate value for Applera-Applied Biosystems shareholders as well as the ability to participate in future upside potential. It also enhances our ability to serve the needs of our customers and positions us for long-term success in the highly competitive and rapidly evolving life sciences field. I am pleased that the combined company will be led by such a capable and energetic team of executives.”

Mr. Stevenson, President and Chief Operating Officer of Applied Biosystems, said, “Combining Applied Biosystems’s and Invitrogen’s capabilities will realize growth opportunities greater and faster than either company could achieve independently. Together, Applied Biosystems and Invitrogen will produce innovative new products that better meet the needs of our customers and expand opportunities for stockholders and employees.”

Strategic and Financial Benefits of the Transaction

• Highly Complementary, Best-In-Class Product Offerings. The combined company will generate greater than 70% of its revenue from consumables and services. In addition, Invitrogen and Applied Biosystems have highly recognizable brands in core structural and functional genomic product areas, cell biology, proteomics and other mass spectrometry-based applications, as well as foundational tools such as transfection reagents, antibodies, fluorescent technologies, and cell culture reagents. These products, along with Applied Biosystems’s systems integration capabilities, will serve as the basis for developing new high-performance workflow solutions for customers. Furthermore, the company will have significant R&D resources and a sizable intellectual property estate of over 3,600 patents and licenses.
• Broad and Extensive Commercial Organization. Both Invitrogen and Applied Biosystems have exceptional teams of talented and experienced employees, with strong customer connections. The combined company will have an industry-leading team of approximately 3,000 sales and service employees and serve customers in more than 100 countries worldwide. These employees will be uniquely positioned to fully capture cross-selling opportunities. Furthermore, Applied Biosystems’s businesses will benefit from utilizing Invitrogen’s industry-leading e-commerce systems and its expansive network of onsite supply centers.
• Strong Platform for Expansion into New, High Growth Markets. Invitrogen and Applied Biosystems will be well positioned to compete in several rapidly growing markets, such as next generation sequencing, cell biology, applied markets and emerging geographies. The company believes this expansion will be achieved through a combination of Invitrogen’s consumables content and chemistry core competencies, as well as Applied Biosystems’s systems expertise and strong presence in applied markets.
• Cost Savings and Operational Efficiencies. The transaction is expected to generate a run rate of approximately $125 million in cost savings by the third year of the combination. These cost savings are expected to be realized through enhanced sourcing and logistics efficiencies; site rationalization to achieve production scale; research and development optimization; and overhead synergies.
• Operating Income from Revenue Synergies. Invitrogen and Applied Biosystems expect to achieve a run rate of at least $50 million in annual operating income from revenue synergies by the third year of the combination. The companies expect to achieve these revenue synergies through cross-selling and channel opportunities, penetration and access to new markets, and new joint products.