Associate Managing Editor
Replacing cash needed for its acquisition of Molecular Probes Inc., Invitrogen Corp. priced $325 worth of notes sold to institutional buyers.
The 2 percent senior convertible notes are due 2023 and Invitrogen, of Carlsbad, Calif., granted purchasers a 13-day option to buy another $48.75 million aggregate principal amount in notes. The sale is expected to close Friday.
"We have done convertible bonds in the past and we think they offer an attractive interest rate, compared to a straight debt financing," said Paul Goodson, vice president of investor relations at Invitrogen. "We were able to get some attractive terms on the conversion price of it. And it's extremely long in terms of bonds."
The notes will be convertible into common stock at a rate of about 14.6 shares per $1,000 of notes, in certain circumstances, which is equal to about $68.24 per share, or a 32.5 percent premium to Monday's close of $51.50.
Its stock (NASDAQ:IVGN) rose 34 cents Tuesday to close at $51.83.
Beginning Aug. 1, 2010, Invitrogen will pay interest on the notes during a six-month interest period if the average trading price of the notes is above a specified but undisclosed level.
In early July, Invitrogen said it was acquiring Molecular Probes, of Eugene, Ore., for $325 million in cash as part of Invitrogen's plan to move from an early stage research company to being a preferred drug development partner. Molecular Probes works in fluorescence-based methods for labeling molecules used in research and drug discovery. Invitrogen had cash and cash equivalents of $541 million at the end of the second quarter and another $308 million in short-term investments held to maturity. It's not as if the company needed the money for the Molecular Probes acquisition, but it's now able to keep its cash levels about even. (See BioWorld Today, July 3, 2003.)
"We certainly had enough to pay for Probes," Goodson said. "The primary purpose [of the funding] is to pursue our acquisition strategy. In essence, we've replicated the money we'll pay for Probes and still go forward with the same amount of cash that we had before."
The company has chosen an individual, August Sick, to head to Eugene and run Molecular Probes. The acquisition is expected to close "on or around the end of September," Goodson said.
The Molecular Probes acquisition is a prime example of the way Invitrogen is planning to grow - by acquisition. Last October the company paid $47 million for InforMax Inc., an informatics software provider. Earlier this year it bought for $95 million biochemical and cellular assay capabilities and a commercial portfolio of reagents, probes and proteins from PanVera LLC, a subsidiary of Vertex Pharmaceuticals Inc., of Cambridge, Mass. Just about three weeks ago it acquired Genicon Sciences Corp., of San Diego, for $2 million, getting product lines and some technology rights to tools and methods for ultra-sensitive signal generation and detection. (See BioWorld Today, Oct. 16. 2002, and Feb. 5, 2003.)
"We are focused on expanding Invitrogen across the entire drug development continuum - genomics, proteomics, then moving through preclinical, through clinical trials, through bioproduction of commercial quantities of [proteins]," Goodson said. "We want to play a role across that whole continuum."
Along those lines, the company has identified five areas in which it needs expertise: proteomics, cellular and biochemical-based assays, labeling and detection technologies, bioinformatics, and cell culture and bioproduction.
Looking over its acquisitions, Goodson said, "We've made hits in some of those areas, but not in cell culture and it's still an area of high interest for us."
As a partner or a potential purchaser, Invitrogen has something to offer - a strong sales and marketing group, Goodson said.
"Many companies don't have an obvious path to customers," he told BioWorld Today. "Probes didn't have any direct sales force," instead relying on catalog and Internet sales.
By offering that as well as technology synergies, Invitrogen is "an obvious and very attractive partner for acquiring some of these companies," he said.