Bruker BioSciences (BRKR; Billerica, Massachusetts) reported an agreement to acquire the companies of the private Bruker BioSpin (Rheinstetten, Germany) for $388 million in cash and 57.5 million in BRKR shares, valued at $526 million at the Nov. 28 trailing 10 trading day average closing price of $9.14 a share – bringing the total purchase price to $914 million.

The transaction is expected to close early next year. If the acquisition is approved, BioSpin would join the existing BRKR companies Bruker AXS (Madison, Wisconsin), Bruker Daltonics (Billerica, Massachusetts) and Bruker Optics (also Billerica, Massachusetts).

Frank Laukien, president/CEO of Bruker BioSciences, listeners to a conference call on the deal Monday morning that Bruker is expected to be at or close to a $1 billion revenue company in 2008 “providing high performance scientific instrumentation and analytical solutions for life sciences, materials research, homeland security, as well as applied and industrial markets.”

Excluding transaction fees, the acquisition is expected to be highly accretive for BRKR, the company said, and should significantly improve its operating margin and cash flow profile. Including the BRKR shares to be issued with the deal, and including estimated interest expense that would have been incurred on the acquisition related debt, the pro forma EPS for the combined companies in 2006 and for the nine months ended Sept. 30, would have increased by more than 50%, when compared to the actual EPS of BRKR as a stand-alone company during these periods. The combination is also expected to generate both additional revenue-related synergies through cross-selling opportunities and integrated solutions development, as well as modest cost and expense synergies through better sourcing efficiencies and shared administrative functions, the company noted.

“This business combination will enable us to better leverage the Bruker brand and to increase our capabilities even further in many of the markets and geographies that we serve,” Laukien said. “We expect that a combined single public Bruker company will be beneficial to our customers, employees and suppliers, and will be advantageous to all Bruker BioSciences shareholders through significantly improved operating margins, net income margins, EPS and cash flows.”

BioSpin designs “enabling life science and analytical research systems” based on magnetic resonance core technology. Its technology platforms include nuclear magnetic resonance (NMR), electron paramagnetic resonance (EPR), research MRI, as well as superconducting magnets and superconducting wire.

“The Bruker companies – and really what is today Bruker BioSpin – were originally founded in 1960 in Germany by one of our founders and my late father, Professor Guenther Laukien,” Laukien said.

As one BRKR investor pointed out on the conference call, it does not come as a surprise that the two companies would come together. Thus the investor asked Laukien for the rationale behind the timing of the transaction – in other words, why now?

“There is no particular magic to the timing, it sort of has been a steady ongoing process really from a long-term shareholder perspective,” Laukien said.

However, he said, one thing that might have attributed to the timing was the smaller-scale acquisition of Bruker Optics last year.

“[That deal] I believe was really quite successful for everyone. This was a win-win situation, it was successful for the previous private Bruker Optics shareholders, as well as the public shareholders, and it obviously improved the financial profile and breadths and depths of BRKR,” Laukien said, adding that BioSpin shareholders recognized that deal as a positive experience and concluded that it was a sensible long-term strategy to have all the Bruker companies under one umbrella.

“I think that really was what drove the timing ... to where this was feasible and achievable at this point of time,” he said.

The new combined company is expected to be renamed Bruker Corporation and will have expected 2007 pro forma revenue in excess of $900 million, and more than 3,700 employees.

Six members of the Laukien family, who own about 52% of Bruker BioSciences on an undiluted basis, also own 100% of the stock of the Bruker BioSpin, and are expected to own about 69% of the combined company after closing.