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Luminex Corporation Announces Agreement to Acquire EraGen Biosciences
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Luminex Corporation Announces Agreement to Acquire EraGen Biosciences

Luminex Corporation Announces Agreement to Acquire EraGen Biosciences
News

Luminex Corporation Announces Agreement to Acquire EraGen Biosciences

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Luminex Corporation has announced a definitive agreement to acquire privately-held EraGen Biosciences, Inc., an innovator in molecular diagnostic testing technologies for infectious disease and genetic applications.

Under the terms of the agreement Luminex will purchase all outstanding shares of EraGen for approximately $34 million in cash, subject to certain adjustments. The transaction is anticipated to close within the next several weeks.

The acquisition of EraGen Biosciences provides Luminex with access to a highly complementary portfolio of molecular diagnostic assays based on an innovative and proprietary technology platform called MultiCode®. This unique assay chemistry is a flexible platform for both real-time polymerase chain reaction (PCR) and multiplex PCR-based applications.

In addition to an expanded offering of new assays, the acquisition of EraGen will broaden Luminex' product offering to its existing customer base, open new market opportunities with new customers and accelerate future product development.

"We are excited by the opportunity to expand our capabilities and product line in the important and rapidly growing infectious disease and molecular diagnostic markets with high growth, high margin, complementary assays," said Patrick J. Balthrop, president and CEO of Luminex.

Balthrop continued, "The acquisition of EraGen builds on the strategic investments we have made and provides additional resources for sales, support, and assay development, strengthening our leadership position and expanding our footprint within the molecular diagnostic market."

"By acquiring EraGen, Luminex has significantly enhanced its competitive strength," said Irene Hrusovsky, M.D., president and CEO of EraGen Biosciences. "As one of America's fastest growing companies, Luminex will benefit from EraGen's innovative technologies and expertise to penetrate new segments. I am confident that the company will realize significant business and technology synergies as Luminex brings the global reach and scale required to effectively leverage the enormous potential of EraGen's franchise in molecular diagnostics."

Current EraGen products include the MultiCode-RTx Herpes Simplex Virus (HSV) 1&2 Kit, the first FDA cleared PCR-based qualitative test for the detection and typing of HSV-1 or HSV-2 from vaginal lesion swab specimens.

The company also has several analyte specific reagents (ASRs) for detection of infectious agents and has developed research use only (RUO) reagents for infectious diseases associated with organ transplants.

Founded in 1999 and located in Madison, Wisconsin; EraGen has approximately 70 employees as well as a 27,000 sq. foot ISO 13485:2003 and CMDCAS certified facility. Luminex anticipates operations will remain in Madison, WI.

Financial Details

Under the terms of the agreement, Luminex will pay approximately $34 million in cash to acquire EraGen, which generated approximately $8.0 million in product revenue during 2010. Luminex expects the EraGen acquisition will add between $5 million and $7 million to 2011 consolidated revenue.

Luminex expects to record charges for non-recurring cash and non-cash acquisition-related costs in connection with the transaction. The full extent of these charges will not be determined under the rules of purchase accounting until valuation has been completed.

In addition, transaction-related professional fees will be expensed as incurred, as required by GAAP per ASC 805 "Business Combinations."

On a GAAP basis, inclusive of purchase related costs, Luminex expects this acquisition to be dilutive in 2011 and accretive to earnings in 2012. Luminex expects the acquisition to be neutral to earnings in 2011 on a non-GAAP basis as a result of acquisition costs and required accounting adjustments. These costs are not expected to repeat in subsequent periods.

Completion of the transaction is subject to the approval of EraGen shareholders and certain other customary conditions.

Luminex will provide a strategic update on its pipeline and key initiatives at its upcoming investor event scheduled to take place on July 25, 2011 in Atlanta, GA.

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