For Caliper, CRi Purchase A Natural Fit
BRANDON BUTLER
Caliper Life Sciences recently purchased Cambridge Research & Instrumentation for $20 million.
Sometimes when a company buys another business there can be some disagreement, ill will, or it can be viewed as a hostile takeover.
That seems to be far from the case for Hopkinton's Caliper Life Sciences, which recently dropped about $20 million to buy a Woburn-based biotechnology company, Cambridge Research & Instrumentation.
Caliper CEO Kevin Hrusovsky said he's "absolutely excited about the upside potential" of the deal and George Abe, the former CEO of CRi and now a vice president with Caliper, called the pairing a perfect fit.
Adding CRi's tissue analysis capabilities for detecting cancer enhances the scope of services Caliper can offer. The move also represents another acquisition for Caliper, which has steadily bought a handful of companies during the past few years.
For CRi, getting purchased represents a coming of age for the 50-employee business. It was started more than two decades ago and will now be part of a much larger and growing company in the biotech sector.
Dovetail Deal
Caliper purchased CRi in late December with a combination of cash, Caliper stock and by paying off CRi debt. Caliper, which has about 430 employees, has been increasing its revenues in recent quarters, but still struggles to be profitable. The company specializes in producing laboratory equipment and providing testing services.
CRi has two major focuses as a company. The first is imaging products, which offer a way for doctors and researchers to test and analyze samples. Caliper already has a robust imaging division, which CRi will be folded into.
The other major function of CRi is its tissue analysis, which is the main reason Caliper bought the company. Doctors use the service as a way to get acute analysis of tissue samples to detect cancer and devise treatments.
The tissue analysis service will fit into a growing suite of services Caliper has been developing that provide testing and analysis services for doctors and pharmaceutical companies.
Hrusovsky sees a significant market for analysis service offerings.
"There is a big problem with misdiagnosis of different cancers," he said. "Sometimes they are over- diagnosed, sometimes under-diagnosed, sometimes it can look like cancer when there actually isn't."
Caliper already has testing services, but the CRi purchase will expand the company's testing of human tissues for analysis.
CRi is not a young company by any means. It was started about 25 years ago by "three smart guys with an idea," said Abe.
"While we were a growing and profitable business, we've been constrained by the capital we had, so we began looking for investment," he said.
Discussions with Caliper were part of a multi-year process and began soon after Caliper's 2008 purchase of Xenogen, which specializes in imaging equipment on live animals. CRi came onto Caliper's radar as a competitor for Xenogen.
Hrusovsky said he wanted to study CRi, its financial performance and product offerings before making an offer to acquire the company. That process took almost two years, but finally culminated with Caliper announcing the offer to purchase CRi in early December. CRi is getting about $7.5 million in cash, about $10 million in Caliper stock, and Caliper is paying off about $1.3 million in CRi debt.
The deal comes as Caliper recently received a $270,000 tax incentive from the Massachusetts Life Sciences Center in exchange for promising to create 11 jobs in 2011.
The purchase also seems to represent the continuation of a growth strategy that has combined organic growth within the company, plus growth through acquisitions. Revenues have grown for Caliper from about $20 million in 2003 to more than $120 million in 2009.
Hrosovsky said the timing of the CRi purchase will likely mean Caliper is done buying companies until at least late 2011 or maybe even 2012.
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