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Invitrogen to Buy Applied Biosystems for $6.7 Billion

Invitrogen plans to buy Applied Biosystems in a deal valued at $6.7 billion to form a massive provider of research tools for the life sciences industry, the companies said on Thursday.

The purchase price of $38 per share in cash and stock represents a premium of 17 percent over Applied Biosystems' closing price on Wednesday and 12 percent over its average closing price over the past 30 days. The split is expected to be 45 percent cash and 55 percent Invitrogen stock.

The combined company will generate about $3.5 billion in combined sales, offering a wide variety of products in areas such as genetic analysis, proteomics, cell biology and cell systems.

Applied Biosystems' equipment includes mass spectrometers, which can measure the molecular weight of proteins and thereby identify them.

Invitrogen shares fell 10 percent after the deal announcement, while Applied Biosystems rose 8 percent.

"In the most general terms, it makes sense in terms of their expertise in molecular biology, efficiencies in combined sales forces, overlap on product line and intellectual property interests," said Deutsche Bank analyst Ross Muken. Such a combination was a source of speculation at a conference in Denver last week, he added.

Upon closing, Invitrogen shareholders would own the majority of the merged company, which would be named Applied Biosystems.

Applied Biosystems is one of two tracking stocks of Applera, which announced the deal with Invitrogen. Celera Group is the other.

The companies expect the merger to close in the fall and to be neutral to or slightly help earnings per share in the first year and significantly positive in the second year.

Invitrogen shares fell $4.35 to $39 in early electronic trading from a Wednesday close of $43.35 on Nasdaq.

Applied Biosystems shares rose to $35 from Wednesday's New York Stock Exchange close of $32.44.