QIAGEN Completes Management Buyout of its Synthetic DNA Business Unit
QIAGEN to Keep its siRNA Business and to Retain Preferred Access to Synthetic DNA Supply
Venlo , The Netherlands , June 30, 2004 - QIAGEN N.V. (Nasdaq: QGENF; Frankfurt , Prime Standard: QIA) today announced that it has sold its synthetic DNA business to a management team previously employed at QIAGEN and which operated parts of this business. The new company is backed by private investors and QIAGEN will retain a minority stake of 16%. The new company, to be named Operon Biotechnologies Inc., expects to continue to expand the leadership position QIAGEN has built in this market. QIAGEN will retain all rights and activities in its leading siRNA business including ownership of QIAGEN's proprietary TOM-amidite chemistry.
Pursuant to the terms of the agreements, QIAGEN will retain a minority equity ownership of 16% in Operon Biotechnologies and, in addition, receive a consideration of approximately US$ 24.3 million, of which approximately US$ 17.8 million are in cash and the remainder in a promissory note. In addition, QIAGEN will receive preferred access to Operon Biotechnologies' synthetic nucleic acid manufacturing capacities as well as preferred purchasing rights. QIAGEN also has the exclusive right to utilize these highly efficient manufacturing capacities and the value of their continued improvements for contract manufacturing of siRNA products that QIAGEN will continue to market.
QIAGEN's synthetic DNA business primarily consists of business built organically and business added through the acquisitions of Operon Technologies Inc. in Alameda , California in 2000 and the Sawady Group in Tokyo in April 2001. The resulting business unit, with operations in the US, Germany and Japan focused on providing custom oligonucleotides, and, increasingly, shelf products such as array ready oligo sets (AROS). QIAGEN had issued a total of approximately 3.7 million common shares to acquire these businesses. While QIAGEN is selling majority ownership in these business activities, QIAGEN believes that significant value is retained at QIAGEN through the preferred access and preferred terms. Based on forecasts for this business, it was expected to contribute approximately 10% of QIAGEN consolidated net sales and approximately 7% of its operating profit in the second half of fiscal 2004. The transaction is effective from June 30, 2004 at which time QIAGEN accounts for these business activities as a minority, passive investment and as a result, ceases to reflect their revenues and operating income as of such date.
The management team leading the buyout is headed by Patrick A. Weiss. Patrick A. Weiss was the founder of Xeragon Inc, which QIAGEN acquired in 2002 and is an expert in nucleic acid chemistry and chemical synthesis operations.
"We are excited to be leading Operon Biotechnologies into its next phase of growth. QIAGEN has returned its nucleic acid synthesis operations to profitability and we believe Operon Biotechnolgies is now superbly positioned to expand this leadership position. Through this spin-out, we have not only created an focused technology and market leader in nucleic acid synthesis products, but can also allow Operon Biotechnologies strategic moves and culture to address what we believe is an exciting opportunity," said Patrick A. Weiss, Operon Biotechnologies Chief Executive Officer."
"We are very pleased to have found what we believe is a great solution for our synthetic DNA business. We are retaining key preferred access rights while at the same putting this business into the hands of a very qualified and committed team. QIAGEN is today an exceptionally driven and focused leader in the life sciences supply industry. Our innovation, commitment and passion are directed towards pre-analytical sample preparation. We have great opportunities in our core space to focus on," said Peer M. Schatz, QIAGEN Chief Executive Officer. "Oligonucleotides have always been a flanking business to QIAGEN and in recent years were exposed to a significantly volatile market environment and lower margins. In 2003 we were able to turn this business from a loss-contributor to a profitable unit that stands strong today. However, we believe that the market dynamics and strategic directions this business is moving into have become different in nature compared to the markets and path QIAGEN intends to focus on. With Operon Biotechnologies now in great hands and QIAGEN's preferred terms for and access to Operon Biotechnologies' manufacturing capabilities with all the economies of scale of a market leader, we believe we have found a perfect solution and can now focus on QIAGEN's clearly defined and exciting mission."
Detailed information on this transaction, including its impact on QIAGEN financials, will be presented in a conference call QIAGEN will host on July 1, 2004 at 9:30am EDT. The corresponding presentation slides will be available 60 minutes ahead of the conference call on the Company's website at http://www.qiagen.com//goto/070104 . A webcast of the conference call will be available at www.videonewswire.com/QIAGEN/070104.
QIAGEN N.V., a Netherlands holding company with subsidiaries in Germany , the United States , Japan , the United Kingdom , Switzerland , France , Italy , Australia , Norway , Austria , Canada , and the Netherlands believes it is the world's leading provider of innovative enabling technologies and products for the separation, purification and handling of nucleic acids. QIAGEN has developed a comprehensive portfolio of more than 320 proprietary, consumable products for nucleic acid separation, purification and handling, nucleic acid amplification, as well as automated instrumentation, synthetic nucleic acid products and related services. QIAGEN's products are sold in more than 42 countries throughout the world to academic research markets and to leading pharmaceutical and biotechnology companies. In addition, QIAGEN is positioning its products for sale into developing commercial markets, including DNA sequencing and genomics, nucleic acid-based molecular diagnostics, and genetic vaccination and gene therapy. QIAGEN employs approximately 1,400 people worldwide. Further information on QIAGEN can be found at http://www.qiagen.com/.
Certain of the statements contained in this news release may be considered forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. To the extent that any of the statements contained herein relating to QIAGEN's products, markets, strategy or operating results are forward-looking, such statements are based on current expectations that involve a number of uncertainties and risks. Such uncertainties and risks include, but are not limited to, risks associated with management of growth and international operations (including the effects of currency fluctuations and risks of dependency on logistics), variability of operating results, the commercial development of the DNA sequencing, genomics and synthetic nucleic acid-related markets, nucleic acid-based molecular diagnostics market, and genetic vaccination and gene therapy markets, competition, rapid or unexpected changes in technologies, fluctuations in demand for QIAGEN's, products (including seasonal fluctuations), difficulties in successfully adapting QIAGEN's products to integrated solutions and producing such products, the ability of QIAGEN to identify and develop new products and to differentiate its products from competitors, and the integration of acquisitions of technologies and businesses. For further information, refer to the discussion in reports that QIAGEN has filed with the U.S. Securities and Exchange Commission (SEC).
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