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Invitrogen and AB postpone merger

The sharp downturn in markets over recent weeks is delaying a final shareholder vote on the linkurl:merger;http://www.the-scientist.com/blog/display/54747/ of biotech companies linkurl:Invitrogen;http://www.the-scientist.com/article/display/18238/ and linkurl:Applied Biosystems;http://www.the-scientist.com/article/display/15680/ (ABI). The delay "is a direct consequence of the dramatic drop in share prices across the board since June," Peter Dworkin, vice president of investor relations and cor

By | October 15, 2008

The sharp downturn in markets over recent weeks is delaying a final shareholder vote on the linkurl:merger;http://www.the-scientist.com/blog/display/54747/ of biotech companies linkurl:Invitrogen;http://www.the-scientist.com/article/display/18238/ and linkurl:Applied Biosystems;http://www.the-scientist.com/article/display/15680/ (ABI). The delay "is a direct consequence of the dramatic drop in share prices across the board since June," Peter Dworkin, vice president of investor relations and corporate communication at Applied Biosystems, told __The Scientist__. The two companies were scheduled to meet tomorrow (October 16) so shareholders could vote to finalize the merger. The deal was worth $6.7 billion in an estimated 45%-55% cash/stock split when it was announced on June 12, but is now valued at closer to $5.5 billion given current share prices, according to Invitrogen spokesperson Farnaz Khadem. The meetings have been postponed to allow shareholders time to consider a change to the terms that would nullify a clause stating that the merger would be considered a tax-free reorganization, Dworkin said. According to the original agreement between the companies, ABI shareholders would pay tax only on the cash portion of the deal. But because the value of Invitrogen shares has declined markedly in recent months (plunging from $38.73 on June 12 to just over $29 in Wednesday morning trade on the Nasdaq), explained Dworkin, the new agreement will make both cash and stock portions taxable for US investors. Invitrogen and Applied Biosystems will now hold shareholder meetings on Oct. 28, according to a linkurl:statement;http://press.appliedbiosystems.com/corpcomm/applerapress.nsf/ABIDisplayPress/AF11CAA98005FD30882574E30004713C?OpenDocument&type=abi issued by the companies, and the deal is expected to be completed by the end of November, pending shareholder approval and a European Union anti-trust review. Dworkin said that even with this change to the proposed deal, he expects ABI shareholders to continue to support the merger. "At the margin, this is probably a little less favorable to Applied Biosystems shareholders, but we don't expect this to change our shareholders level of support for the deal." Dworkin said that shareholders have been voting over the last few weeks, and that they've been supporting the deal overwhelmingly. "Both companies feel the logic, the strategic rational, is as strong as it ever was," he said. "Both boards continue to support the deal." Dworkin also said that the combined company - to be called Applied Biosystems after closure of the deal - will still fulfill its linkurl:goal;http://www.the-scientist.com/blog/display/54762/ of providing world-class biotechnology tools to the scientific community. "There's no change to the plans to serve our global customer base," he said.

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