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Affymetrix (Santa Clara, California) (AFFX) to Acquire eBioscience, Inc. for $330 Million


11/30/2011 6:35:20 AM

SANTA CLARA, Calif.--(BUSINESS WIRE)-- Affymetrix, Inc., (NASDAQ:AFFX - News) today announced that it has signed a definitive agreement to acquire eBioscience, Inc., a privately-held San Diego, CA-based company with an industry-leading position in flow cytometry and immunoassay reagents for immunology and oncology research and diagnostics. Under the terms of the agreement, Affymetrix will acquire eBioscience for $330 million in cash subject to certain customary adjustments. The transaction is subject to customary closing conditions and is expected to close late in the fourth quarter of 2011.

Affymetrix expects the acquisition of eBioscience to:

•Create significant new commercial opportunities in the key post-genomic applications of immunology, oncology, cell biology, stem cell biology, and diagnostics

•Diversify the Company’s revenues to complement its genomics franchise

•Augment the Company’s growing business in molecular diagnostics

•Expand the Company’s product portfolio to include multicolor flow cytometry reagents and a broad spectrum of reagents for the analysis of cytokines, growth factors and other soluble proteins

•Enhance the operational and new product opportunities for Panomics RNA and protein analysis products

•Leverage the commercial capabilities of both companies to generate new opportunities for growth

“The acquisition of eBioscience is transformational for our business, and we are enthusiastic about the opportunities it creates,” said Dr. Frank Witney, president and chief executive officer of Affymetrix. “With eBioscience, Affymetrix will significantly expand its addressable markets by adding an industry-leading portfolio of cell-based and immunoassays. These new products are a critical part of our customers’ workflow in our key target markets of translational medicine, oncology, and immunology. We believe that these markets represent a nearly three-billion dollar annual opportunity, which will put Affymetrix on a solid path to sustained growth and profitability. We look forward to welcoming the eBioscience team to the Affymetrix family.”

“This transaction places Affymetrix at the forefront of immunology and oncology, two of the fastest growing segments of molecular and translational medicine,” said Dr. Stephen P.A. Fodor, founder and chairman of Affymetrix. “eBioscience complements our traditional businesses of genomics and cytogenetics, and dramatically strengthens our foundation in molecular diagnostics.”

“The combination of Affymetrix and eBioscience has significant benefits,” said Tim Barabe, executive vice president and chief financial officer of Affymetrix. “With 2011 sales expected to exceed $70 million, gross margins in excess of 70% and EBITDA margin of approximately 30%, eBioscience makes Affymetrix a much stronger company, both operationally and financially. The purchase price represents approximately 4.5 times 2011 revenue and 14 times 2011 EBITDA.”

The transaction will be funded using a combination of roughly 50% cash-on-hand and 50% committed debt to avoid dilution and maximize value to shareholders.

Affymetrix has obtained a fully underwritten senior secured financing commitment in the amount of $190 million (including a $20 million revolving credit facility) led by administrative agent GE Capital, Healthcare Financial Services and including, as lenders, Silicon Valley Bank, CIT Healthcare LLC and CIT Bank. Affymetrix will be required to retain cash-on-hand of approximately $95 million to cover its outstanding convertible debt that can be put to the Company in January of 2013. GE Capital Markets, Silicon Valley Bank and CIT Capital Securities LLC will serve as joint lead arrangers and bookrunners for the transaction.

Affymetrix, which is headquartered in Santa Clara, expects to maintain eBioscience’s management team and operations in San Diego.

Houlihan Lokey, Inc. is acting as exclusive financial advisor to Affymetrix and Davis Polk & Wardwell LLP is acting as legal counsel to Affymetrix in the transaction. Jefferies & Company, Inc. is acting as exclusive financial advisor to eBioscience and DLA Piper LLP is acting as eBioscience's legal counsel in the transaction.

Affymetrix's management team will host a conference call on November 30, 2011 at 5:30 a.m. PT to discuss the acquisition. A live webcast can be accessed by visiting the Investor Relations section of the Company’s website at www.affymetrix.com. In addition, investors and other interested parties can listen by dialing domestic: (877) 407-8291, international: (201) 689-8345.

Click here to view the webcast

A replay of this call will be available from 5:00 p.m. PT on November 30, 2011 until 8:00 p.m. PT on December 7, 2011 at the following numbers: domestic: (877) 660-6853, international: (201) 612-7415. The passcode for both replays is 384116. An archived webcast of the conference call will be available under the Investor Relations section of the Company's website.

About Affymetrix

Affymetrix technology is used by the world's top pharmaceutical, diagnostic, and biotechnology companies, as well as leading academic, government, and nonprofit research institutes. More than 2,100 systems have been shipped around the world and over 25,000 peer-reviewed papers have been published using the technology. Affymetrix is headquartered in Santa Clara, California, and has manufacturing facilities in Cleveland, Ohio, and Singapore. The Company has more than 900 employees worldwide and maintains sales and distribution operations across Europe, Asia and Latin America. For more information about Affymetrix, please visit the Company's website.

All statements in this press release that are not historical are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act as amended, including statements regarding potential size of addressable market opportunity, expected accretion, expected operational and financial benefits of the merger, potential for substantial growth and profitability, expected timing for closing and expected ability to finance the transaction on customary terms, and statements regarding Affymetrix' "expectations," "beliefs," "hopes," "intentions," "strategies" or the like. Such statements are subject to risks and uncertainties that could cause actual results to differ materially for Affymetrix from those projected, including, but not limited to: risks relating to the Company’s ability to successfully commercialize new products, risks relating to the acquisition, including the ability of the Company to successfully integrate the acquisition into its existing business; risks relating to the Company's ability to achieve and sustain higher levels of revenue, higher gross margins and reduced operating expenses; uncertainties relating to technological approaches, risks associated with manufacturing and product development; personnel retention; uncertainties relating to cost and pricing of Affymetrix products; dependence on collaborative partners; uncertainties relating to sole-source suppliers; uncertainties relating to FDA and other regulatory approvals; competition; and risks relating to intellectual property of others and the uncertainties of patent protection and litigation. These and other risk factors are discussed in Affymetrix' Annual Report on Form 10-K for the year ended December 31, 2010, and other SEC reports. Affymetrix expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Affymetrix' expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As used in this press release EBITDA means earnings before interest, taxes, depreciation, amortization and stock option expense.

PLEASE NOTE:

Affymetrix, the Affymetrix logo, GeneChip, and all other trademarks are the property of Affymetrix, Inc.

Contact:

Affymetrix, Inc.

Doug Farrell, 408-731-5285

Vice President of Investor Relations.


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