Global lab chemical and life sciences company Sigma-Aldrich Corporation (SIAL) has acquired Ohio-based leading biochemicals supplier Research Organics, Inc. for an undisclosed price. The acquisition is expected to boost the Missouri-based company’s buffer production capacity and expand its pharmaceutical grade (PharmaGrade) portfolio of raw materials for the biopharmaceutical and diagnostic industries.

Research Organics is a leading provider of high purity biochemicals for application in molecular biology, diagnostics, cell culture, pharmaceuticals, biopharmaceuticals, life sciences and biotechnology. Its vast product range includes biological buffers, reagent biochemicals, enzyme substrates, fluorescent compounds, neurochemicals and plant tissue culture reagents.

Following the acquisition, Research Organics will be integrated into SAFC, the custom manufacturing and services division of Sigma-Aldrich. SAFC is focused on biochemical production and manufacturing of complex organic compounds. The unit accounted for 29% of the company’s sales in 2011.

The acquisition complements Sigma-Aldrich’s existing PharmaGrade portfolio of raw materials and will enable it to offer more innovative solutions to its customers. The company expects the transaction to be neutral to its earnings in 2012.

Sigma Aldrich makes and distributes various biochemicals and organic chemicals that are used in scientific and genomic research, biotechnology, pharmaceutical development, diagnosis of diseases and chemical manufacturing. The company’s significant investments in sales, marketing and R&D initiatives are generating demand for its products.

The SAFC unit posted revenues of $185 million in the fourth quarter of 2011, a 7% year-over-year organic growth. Sigma Aldrich expects low-to mid-single-digit growth for the unit in first-half 2012 and low double-digit growth in the second half due to additional capacity in China and Taiwan.

To boost growth, Sigma Aldrich plans to increase its focus on marketing, business development and R&D, while continuing with its efforts to improve process and operations management. Moreover, Sigma Aldrich is seeking to take advantage of country-specific opportunities by expanding its presence in high-growth countries.

However, the company’s research business is expected to face economic challenges in 2012 due to uncertainties across the U.S. and Europe. We are currently Neutral on Sigma Aldrich which is in tandem with a short-term Zacks #3 Rank (Hold).

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