PerkinElmer (PKI), has agred to acquire Massachusetts-based software firm CambridgeSoft Corp.
Separately, PKI, a global leader in life science research, wrapped up its acquisition of North Carolina-based life science software provider ArtusLabs Inc.
The aggregate purchase price of these acquisitions is $220 million along with potential additional contingent consideration of up to $15 million.
CambridgeSoft develops discovery, collaboration and research management software for the pharmaceutical, biotechnology and chemical industries. Its solutions help customers create, analyze and communicate chemical, biological, and scientific data more effectively.
ArtusLabs offers scientific data management software and services to the pharmaceutical and related industries that are designed to enhance workplace collaboration and accelerate the research process.
The CambridgeSoft acquisition is subject to customary closing conditions including antitrust clearance and is expected to close in the second quarter of 2011. The twin acquisitions are expected to boost PerkinElmer’s informatics and software offerings.
Cumulative revenues from CambridgeSoft and ArtusLabs are expected to be roughly $65 million in 2011. PerkinElmer expects the acquisitions of these software companies to dilute its 2011 earnings by roughly 13 cents and to be accretive, on an adjusted basis, by 4 cents for the rest of the year.
PerkinElmer has established itself as a market leader, particularly in the genetic screening segment, and holds one of top two market share positions in several important subsets of the life sciences technology and genetic screening businesses. The company continues to gain momentum in important emerging markets such as China, India and Brazil.
PerkinElmer is executing well across all its product lines aided by rebounding markets and cost containment efforts. The company has increased its productivity and improved product mix in favor of higher value added products. A significant stream of recurring revenue is another pillar of strength for the company.
However, the company operates in a highly competitive industry characterized by rapid technological change and evolving industry standards. As a result, it must make large investments in R&D in order to maintain a competitive pipeline. PerkinElmer competes with Thermo Fisher Scientific (TMO) among others.
While PerkinElmer relies on acquisitions to drive growth and expand its product offerings, such an aggressive acquisitive strategy has inherent integration and other risks. We are also concerned about the company’s exposure to non-health care end-markets, such as non-medical imaging and industrial, which tend to be more cyclical in nature. Our Neutral recommendation on the stock is supported by a short-term Zacks #3 Rank (Hold).
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