Applied Biosystems Inc. (ABI) announced Tuesday after themarket closed that it will merge with Perkin-Elmer Corp. in adeal valued at $330 million.

Under the agreement between these two major scientificinstrumentation companies, Perkin-Elmer (NYSE:PKN) ofNorwalk, Conn., will exchange 0.678 shares of its stock (whichclosed at $31 a share Tuesday) for each ABI share (whichclosed at $17 share).

Perkin-Elmer brings its PCR technology and its alliance withHoffmann-La Roche of Nutley, N.J., to the marriage, while ABI(NASDAQ:ABIO) of Foster City Calif., brings its DNA analysisand synthesis technology. They both bring complementaryinternational marketing networks.

"In total, these markets are much larger than the life scienceresearch market that we both serve today," said Andre Marion,ABI's chief executive officer.

Marion told BioWorld that there were several key factorssurrounding the merger. He said that ABI has "tremendousexpertise" in DNA analysis, synthesis, purification andidentity, as well as in RNA and proteins. "We need to apply thatexpertise."

The company is looking for new markets, such as forensics,paternity testing, animal husbandry, agriculture,environmental and personal identification testing. To do this,Marion told BioWorld, "DNA amplification technology isabsolutely necessary. ... If PCR were made available, we couldaddress much larger markets."

Marion added that another appealing aspect of the merger wasthat his company could "enjoy a larger marketinginfrastructure, especially in Europe." And ABI can contributeits strength in well-established distribution channels in Japanto Perkin-Elmer.

Jim McCamant, editor of The Medical Technology Stock Letter,said the deal came as a surprise, as he'd always considered ABIas entrepreneurial and independent in its business approach.But he said the company has been experiencing tough times. "Ithasn't been easy for them (ABI); their stock has been wayhigher and they have had a lot of unhappy investors," McCamanttold BioWorld.

According to McCamant, its been a long-time wish by Perkin-Elmer to become more involved in the biotech industry.

ABI has actually collaborated with Perkin-Elmer for years, butin a limited area, said Marion. As to who actually owns the PCRtechnology at this point, Marion explained that "Hoffmann-LaRoche and Perkin-Elmer are both enjoying a certain ownershipof PCR." The only PCR application that now requires a license[from Hoffmann-La Roche] is for end-use, such as in diagnosticlaboratories, Marion said.

Originally, Cetus was the inventor and owner of the patent onPCR. Cetus sold this technology to its partner, Hoffmann-LaRoche, for $300 million before it merged with Chiron in 1991.At the same time, Cetus dissolved its PCR joint venture withPerkin-Elmer. This allowed Perkin-Elmer to reach anagreement with Roche whereby the instrument companyretained exclusive rights to develop and market worldwide itsPCR instruments and the Roche PCR reagents it uses forindustry and research. Roche retained the rights for developingand commercializing all PCR applications for in vitro humanand animal diagnostics.

Perkin-Elmer's fiscal 1992 sales topped $900 million; AppliedBiosystems brought in $180 million.

Applied Bio announced the Perkin-Elmer merger just one dayafter it announced that it had spun off its subsidiary, LynxTherapeutics Inc., which was formed in July to developtherapeutics based on its synthetic DNA technologies.Coincidence? "We've been working on growth and expansion forquite some time. ... It seems everything happens at once,"Applied Bio's Marion said.

-- Jennifer Van Brunt BioWorld Staff

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