Bruker Corporation (NASDAQ: BRKR) today announced the closing of its acquisition of three former Varian Inc. product lines from Agilent Technologies, Inc.
Agilent divested these product lines in connection with obtaining regulatory approval for its May 14, 2010 acquisition of Varian Inc.
The former Varian product lines acquired from Agilent become part of the new Bruker Chemical Analysis Division (CAD), which is part of the Bruker Daltonics mass spectrometry business. The new Bruker CAD products include laboratory gas chromatography (Lab GC), gas chromatography triple-quadrupole mass spectrometry (GC-QQQ-MS), and inductively coupled plasma mass spectrometry (ICP-MS) systems.
In connection with this acquisition, Agilent and Bruker have entered into a transitional services agreement and a supply agreement to facilitate the uninterrupted delivery of high-quality products and services to new and existing customers of the three acquired product lines. Bruker plans to continue to operate these product lines from facilities located in Preston, Victoria (Australia), near Middelburg (The Netherlands) and in Fremont, California (USA). Bruker has retained former Varian key management, research and development, operations, sales and marketing personnel, as well as applications and service personnel supporting these product lines worldwide with more than 250 former Varian staff joining Bruker.
The extensive CAD field organization associated with sales, field applications and service of the three product lines are expected to join additional Bruker sales offices, applications laboratories and service centers in Shanghai and Beijing (PRC), Seoul (KR), Taipei (TW), Yokohama (JP), Billerica, MA (US), Atibaia (BR), Mexico City (MX), Milton, Ontario (CA), Coventry (UK), Champs sur Marne (FR), Madrid (ES), Milano (IT), Faellanden (CH), Bremen and Berlin (DE), as well as Brussels (BE). Additional dedicated CAD staff is planned for India and Russia, while in other geographies previous Varian distributors or Bruker Daltonics sales and service staff will support the customers of these new Bruker product lines.
Mr. Collin D'Silva, President of the Bruker Chemical Analysis Division, commented: "Our new Division is off to a great start with the addition of these three high-performance product lines, in particular due to the loyal customer base and the high-quality, committed employee teams that are associated with these product lines. We are determined to provide the highest level of applications and service support, as well as accelerated applications and product development, to this valued customer base."
Dr. Frank Laukien, President and CEO of Bruker Corporation, stated: "This acquisition offers an opportunity to leverage our existing technology, applications and customer support strengths in scientific instruments. The three new product lines perfectly complement our existing mass spectrometry products, and will further strengthen Bruker’s position in many industrial and applied markets with an expanded portfolio. While the three new product lines form the core offerings of our new Chemical Analysis Division, we plan to add additional products for applied and industrial markets over time. We are delighted that so many talented and highly motivated managers and employees have joined from Varian, and we warmly welcome these new colleagues to Bruker!"
Preliminary Financial Outlook for Bruker Chemical Analysis Division
Currently, visibility for the CAD product lines is still somewhat limited. Bruker is assuming minimal CAD systems backlog immediately after closing, and therefore expects CAD revenue contribution, in the remainder of the second quarter 2010, of about $2 million. In addition to the previously disclosed purchase price of $37.5 million, Bruker expects to incur $3-5 million of one-time acquisition, relocation and transition expenses during the remainder of 2010. In the second quarter of 2010, Bruker anticipates a CAD operating loss, not including the previously mentioned one-time charges, of approximately $1.5-2.5 million. For the second half of 2010, Bruker expects gradually improving CAD financial performance as the new product lines and CAD field organization are transferred to and integrated into Bruker.
Over the next few years, Bruker’s goal is to grow the three acquired CAD product lines and return them to historical financial performance levels with expected annual revenues of $80-100 million and operating margins of greater than 10%. Bruker intends to provide more detailed financial expectations for the acquired CAD product lines for the second half of 2010 and for 2011 in conjunction with its second quarter 2010 earnings release and call.