MDS to acquire Molecular Devices Corp

MDS Sciex, a division of MDS Inc, will become part of a larger new business unit with the acquisition of Molecular Devices Corp (MDC), Sunnyvale CA. The US$615-million cash acquisition — due to close by the end of June — is expected give a major boost to MDS's profitability by 2008 and significantly strengthen the Toronto-based company's presence in the mass spectrometry sector.

The acquisition of MDC — a supplier of high-performance bioanalytical measurement systems — is part of a major transformation of MDS engineered by president and CEO Stephen DeFalco. Since his appointment 18 months ago, MDS has sharpened its core strengths by focusing on three areas: contract research (MDS Pharma Services), molecular imaging and radio-therapeutics (MDS Nordion) and analytical instruments (MDS Sciex) (R$, September 20/05).

Several divisions have been divested since DeFalco's arrival, including its medical diagnostics division for $1.3 billion. That deal with Borealis Infrastructure Management, an investment arm of Ontario Municipal Employees Retirement System, is expected to close in the coming weeks.

The new business unit will be headed by current MDS Sciex president, Dr Andy Boorn. It will have more than 1,100 employees including 250 scientists and engineers with a strong intellectual property portfolio and new product pipeline. For the FY ending Sept 30/06, MDC had sales of $185 million.

The MDC acquisition will not change MDS Sciex's 50-50 joint venture arrangements. In 2004, MDS invested $40 million into its joint venture with Applied Biosystems, Foster City CA, which gave it a 50% interest in that firm's IP assets and a 100% stake in related R&D and manufacturing assets (R$, September 30/04). In 2001, MDS Sciex teamed with PerkinElmer Inc, Wellesley MA, to develop mass spectrometry systems for proteomics, high throughput screening and drug development (R$, June 13/01). In both cases, MDS Sciex is responsible for the R&D and manufacture of instrumentation, while its joint venture partners handle worldwide sales, marketing and customer service.

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