QIAGEN Completes Management Buyout of its Synthetic DNA Business Unit - Operon Biotechnologies Inc.
QIAGEN to Keep its siRNA Business and to Retain Preferred Access to Synthetic DNA Supply
Qiagen N.V. announced that it has sold its synthetic DNA business to a management team previously employed at QIAGEN and which operated parts of this business. The new company is backed by private investors and QIAGEN will retain a minority stake of 16%. The new company, to be named Operon Biotechnologies Inc., expects to continue to expand the leadership position QIAGEN has built in this market. QIAGEN will retain all rights and activities in its leading siRNA business including ownership of QIAGEN's proprietary TOM-amidite chemistry.
Pursuant to the terms of the agreements, QIAGEN will retain a minority equity ownership of 16% in Operon Biotechnologies and, in addition, receive a consideration of approximately US$ 24.3 million, of which approximately US$ 17.8 million are in cash and the remainder in a promissory note. In addition, QIAGEN will receive preferred access to Operon Biotechnologies' synthetic nucleic acid manufacturing capacities as well as preferred purchasing rights. QIAGEN also has the exclusive right to utilize these highly efficient manufacturing capacities and the value of their continued improvements for contract manufacturing of siRNA products that QIAGEN will continue to market.
QIAGEN's synthetic DNA business primarily consists of business built organically and business added through the acquisitions of Operon Technologies Inc. in Alameda , California in 2000 and the Sawady Group in Tokyo in April 2001. The resulting business unit, with operations in the US, Germany and Japan focused on providing custom oligonucleotides, and, increasingly, shelf products such as array ready oligo sets (AROS). QIAGEN had issued a total of approximately 3.7 million common shares to acquire these businesses. While QIAGEN is selling majority ownership in these business activities, QIAGEN believes that significant value is retained at QIAGEN through the preferred access and preferred terms. Based on forecasts for this business, it was expected to contribute approximately 10% of QIAGEN consolidated net sales and approximately 7% of its operating profit in the second half of fiscal 2004. The transaction is effective from June 30, 2004 at which time QIAGEN accounts for these business activities as a minority, passive investment and as a result, ceases to reflect their revenues and operating income as of such date.
The management team leading the buyout is headed by Patrick A. Weiss. Patrick A. Weiss was the founder of Xeragon Inc, which QIAGEN acquired in 2002 and is an expert in nucleic acid chemistry and chemical synthesis operations.
"We are excited to be leading Operon Biotechnologies into its next phase of growth. QIAGEN has returned its nucleic acid synthesis operations to profitability and we believe Operon Biotechnolgies is now superbly positioned to expand this leadership position. Through this spin-out, we have not only created an focused technology and market leader in nucleic acid synthesis products, but can also allow Operon Biotechnologies strategic moves and culture to address what we believe is an exciting opportunity," said Patrick A. Weiss, Operon Biotechnologies Chief Executive Officer."
"We are very pleased to have found what we believe is a great solution for our synthetic DNA business. We are retaining key preferred access rights while at the same putting this business into the hands of a very qualified and committed team. QIAGEN is today an exceptionally driven and focused leader in the life sciences supply industry. Our innovation, commitment and passion are directed towards pre-analytical sample preparation. We have great opportunities in our core space to focus on," said Peer M. Schatz, QIAGEN Chief Executive Officer. "Oligonucleotides have always been a flanking business to QIAGEN and in recent years were exposed to a significantly volatile market environment and lower margins. In 2003 we were able to turn this business from a loss-contributor to a profitable unit that stands strong today. However, we believe that the market dynamics and strategic directions this business is moving into have become different in nature compared to the markets and path QIAGEN intends to focus on. With Operon Biotechnologies now in great hands and QIAGEN's preferred terms for and access to Operon Biotechnologies' manufacturing capabilities with all the economies of scale of a market leader, we believe we have found a perfect solution and can now focus on QIAGEN's clearly defined and exciting mission."
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