Caliper Purchase Has Analysts Optimistic
The proposed sale of Caliper Life Sciences to Waltham-based advanced technologies firm PerkinElmer Inc. could create mutually beneficial outcomes for both companies, according to analysts who track each company.
Hopkinton-based Caliper agreed to be sold to PerkinElmer (PKI) last week in a deal that could be worth up to $600 million.
Analysts who track Caliper say the deal could allow the company to expand its sales reach globally, given new financial and infrastructure support from the much larger PKI.
For PKI, it represents an opportunity to acquire a company that analysts seem to agree has strong growth and profitability potential.
Either way, analysts also suggested that the move will not likely mean cutbacks for Caliper's more than 200 local employees in the MetroWest region, as PKI is investing in the company to help it grow and increase revenues, not cut back.
Industry Notes
It's been an active time for mergers and acquisitions in the life science tools industry in the last decade or so, said Quintin Lai, an analyst with Robert Baird & Co., who tracks PKI.
Customers of life science tool companies are increasingly global, which requires companies to have an international platform. For a company like PKI, it can use its international infrastructure to grow Caliper.
There were a couple of surprises related to the deal, however.
Firstly, Lai said most of PKI's recent acquisitions in the past few years have been smaller, privately held firms. Caliper, which is a publicly traded company, represents the largest deal PKI has made recently, Lai said.
Zarack Khurshid, an analyst with Wedbush Securities in Chicago, was also surprised by the timing of the deal.
Wedbush has named Caliper as a top stock pick consistently for the past few quarters, Khurshid said, noting the company's strong growth potential in two of its major product lines: In-vivo medical imaging and the labchip product lines.
Khurshid believes Caliper officials could have waited even longer to sell the company and gotten an even better price.
"There is nothing not to like about Caliper," Khurshid said.
There have been reports that some Caliper investors have sued the company for selling at too low of a price.
Had Caliper waited a year or two, revenues could have grown and its share price could have increased to the $10-per-share range. If that had happened, the company could have potentially sold at an even higher amount, Khurshid said.
The advantage to being sold now, Khurshid notes, is that the company may be able to pursue an even more aggressive growth strategy, given additional resources and the global infrastructure that PKI will bring to Caliper.
Analysts said Caliper fits in nicely with PKI. The two companies are similar in their core functions, but PKI is much larger.
PKI has 6,200 employees and operations in 150 countries. It recorded $1.7 billion in revenues last year and has 2,900 patents.
Caliper Life Sciences, on the other hand, has struggled to be profitable in recent quarters, but has posted steady revenue increases. The company finished 2010 with a $4.3-million profit on $123 million in revenues. It has about 200 employees in MetroWest.
Kevin Hrusovsky, Caliper president and CEO, plans to remain with the company if the PKI deal is completed. Hrusovsky was unable to speak about the deal because he is traveling internationally on business this week.
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