Beckman To Buy Diagnostics Business from Olympus for $800 Million

$800 million. The acquisition will broaden Beckman Coulter's chemistry offering, enabling it to establish a strong position in larger hospital laboratories and universities where higher throughput systems are preferred. The transaction will also extend the broad chemistry customer base for Beckman Coulter's immunoassay products. In addition Beckman Coulter's strength in total lab automation will be complemented by Olympus' strong pre-analytical automation position in Europe and Asia.

The planned divestment of Olympus's diagnostic systems business to Beckman encompasses the entire business. Beckman has agreed to acquire the R&D, production, and marketing functions of this business both in Japan and in international markets. As part of the agreement, Beckman Coulter has the right to deliver up to 37.5% of the purchase price in the form of Beckman Coulter stock. Correspondingly, Beckman Coulter expects to finance the acquisition with a combination of newly issued Beckman Coulter common stock (approximately $300 million) and newly issued debt (approximately $500 million). Under the intended conservative financing structure, the company does not anticipate a change in its current investment grade ratings.

Olympus entered the diagnostic systems market almost four decades ago and has been engaged in the manufacture and marketing of clinical diagnostic testing systems, primarily automated chemistry analyzers and automated blood transfusion testing systems. The company's diagnostic systems business generated revenue of 52.7 billion yen (approximately $540 million) in the most recent financial year that ended March 2008 and has consistently delivered stable profits.

Because of the rapidly changing dynamics within this global market segment, Olympus determined that the divestment of its diagnostic systems business to Beckman, a major player in this segment, would be the best strategic option and offers clear benefits over retaining ownership and continuing to operate the business within the Olympus Group.

In 2010, the Olympus Diagnostics business is anticipated to increase Beckman Coulter's revenue by approximately $500 million on a full year basis and generate approximately $40 to $50 million in operating income. Beckman Coulter believes that 2010 pre-tax savings of between $50 and $60 million can be achieved from the combination of Olympus operating expenses of about $200 million and Beckman Coulter operating expenses of more than $1 billion.

Scott Garrett, Beckman Coulter's chairman, president and CEO, said, "We remain focused on creating shareholder value through growth, quality, and operating excellence. The combination of Beckman Coulter and Olympus demonstrates our commitment to further expand chemistry and sustain our above-market growth in immunoassay. A foundation of stable markets, a defensive business model, well-recognized competencies in optimizing lab processes, and an unyielding commitment to quality positions us for continued leadership in biomedical testing."

Beckman Coulter, Inc. is a leading manufacturer of biomedical testing instrument systems, tests, and supplies that simplify and automate laboratory processes. From laboratory diagnostics and point-of-care testing to pioneering medical research and clinical trials Beckman Coulter's installed systems provide essential biomedical information to enhance health care around the world. In 2007 the company reported annual sales of $2.76 billion with more than 78% of this amount generated by recurring revenue from supplies, test kits, and services.

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