Luminex Wraps Up EraGen Buy - Analyst Blog
29 June 2011 - 3:38AM
Zacks
Luminex Corporation (LMNX), a developer of
biological testing technologies, has completed its
previously-announced acquisition of privately-held diagnostic
testing company EraGen Biosciences, Inc. for $34 million in cash.
The companies struck a definitive agreement on June 21.
Madison, Wisconsin-based EraGen, with annual sales of $8
million, makes molecular reagent products for infectious diseases
and genetic-based conditions. The company’s products are based on
its proprietary MultiCode technology platform.
The acquisition provides Luminex a highly complementary
portfolio of molecular diagnostic tests based on the MultiCode
platform. Besides, it enables the company to tap new markets
leveraging EraGen’s innovative technologies.
Luminex envisions the acquisition to add between $5 million and
$7 million to its sales for 2011. Moreover, the company expects the
transaction to dilute its earnings (on a reported basis) in
2011 and be
accretive in 2012. On an adjusted basis (excluding
acquisition-related charges), the acquisition is expected to be
neutral to earnings in 2011.
Texas-based Luminex develops and markets proprietary biological
testing technologies, which have applications across the life
sciences industry. Its proprietary open-architecture xMAP
technology enables fast, cost-effective and accurate conduct and
analysis of biological tests.
Luminex possesses an extensive product portfolio and a healthy
pipeline of novel assays. Moreover, the company has a strong
international presence which has helped it to expand its product
portfolio and customer base.
However, Luminex operates in the highly competitive life
sciences industry, characterized by rapid and continuous
technological innovation. The company competes with
Affymetrix (AFFX) and Sequenom
(SQNM), among others.
Moreover, Luminex is challenged by sluggish growth in its core
markets, faces regulatory uncertainties, and heavily depends on
partners to market its instruments and assays, a strategy that has
its risks. Our Neutral recommendation on the stock is in agreement
with a short-term Zacks #3 Rank (Hold).
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