Looking Back on Key Acquisitions of WI Companies in the Past 5 Years
It takes a while for mergers and acquisitions to play out. While immediate insights from investors and industry observers can help their audience understand why a deal happened and what implications it will have for the parties involved, some time must pass before a thorough assessment can be made.
Five years later seems like an appropriate point to take stock of some major deals around town. That was the topic of a panel discussion held on Thursday in Madison, WI. It featured representatives from three companies that were part of acquisitions of Wisconsin-based life sciences firms in 2011:
—Nicholas Caruccio, general manager at Madison-based Epicentre, which was purchased by San Diego-based Illumina for $71 million. Epicentre now operates as a wholly owned subsidiary of Illumina (NASDAQ: ILMN).
—Scott Johnson, vice president at Austin, TX-based Luminex, which bought EraGen Biosciences for $34 million. Luminex (NASDAQ: LMNX) maintains a primary site in Madison, where EraGen was headquartered prior to the sale.
—Andrew Kirkpatrick, senior vice president at Sunnyvale, CA-based Accuray, which acquired Madison-based TomoTherapy for $277 million. About 275 Accuray (NASDAQ: ARAY) employees are based in Madison, Kirkpatrick said.
The panel, titled “Mergers & Acquisitions: Why Do Some Companies Stay In Wisconsin?” also included Kaz Hirao of Madison-based Cellular Dynamics International. In March, the company was sold to Tokyo-based Fujifilm for $307 million; Hirao came on as CEO of Cellular Dynamics about two months later.
All four men were positive about how the acquisitions worked out, though it’s unlikely they would have been selected for the panel if that weren’t the case. They were also candid in pointing out some of Madison’s weaknesses relative to other regions, as well as its strengths.
Kirkpatrick said that leaders at Accuray, a medical device company that specializes in radiation oncology, weren’t exactly gung-ho about relocating to the Midwest following the TomoTherapy purchase.
“When we acquired TomoTherapy, we asked who wanted to go run [our] Madison [office], and it was crickets,” Kirkpatrick said.
He said Madison has a “perception opportunity”—a glass-half-full way of putting it, to be sure—and listed healthcare and production as two of the city’s strong suits. Accuray moved all its manufacturing operations to Madison last year, Kirkpatrick said. “The manufacturing ecosystem is much better than we anticipated,” he said.
Epicentre’s Caruccio, by contrast, was part of an acquisition target, not a buyer. He said that Jeff Eidel, a vice president at Illumina, spent two years working in Wisconsin after the buyout, which helped ensure a smooth transition.
“He helped make introductions to other sites,” said Caruccio, who had worked at Epicentre for about two years before its sale to Illumina, a global leader in genomic sequencing.
It’s likely that one of Illumina’s major reasons for buying Epicentre was Nextera, a time-saving sequencing technology that Caruccio had a hand in developing. Caruccio previously told Xconomy the two companies made a “great fit.” However, on Thursday he said that in general, maintaining multiple sites is expensive. This may mitigate the potential for a surge in deals where a Wisconsin business is sold to—or merges with—another company, but does not move its workforce.
Like Caruccio, Luminex’s Johnson had been part of a firm that was bought and absorbed into a larger one. Following the transaction, Luminex, which has developed technology that can detect multiple strains of a disease in a single sample, didn’t send any employees to Madison on long-term assignments, Johnson said.
Luminex senior vice president Russell Bradley has said that part of the appeal of EraGen, which develops molecular reagent assays, was its Madison location. Luminex now has about 90 employees in the area, said Johnson, who called the company’s acquisition of EraGen a “fantastic success story for Madison.”
Of course, not every deal can turn out so well for the Badger State’s capital city.
In 2007, Swiss pharma giant Roche acquired Madison-based NimbleGen, but in 2012 the company announced it was laying off dozens of its Madison-based employees. That same year, the city lost another 130 jobs when Bedford, MA-based Hologic (NASDAQ: HOLX), which acquired Madison-based Third Wave Technologies in 2008, announced it was transferring its molecular diagnostics operations in Madison to San Diego. And only time will tell whether Fujifilm’s purchase of Cellular Dynamics will prove to be a success.
Kirkpatrick, of Accuray, said deal flow in Madison might pick up if the city’s airport offered more direct flights—one to San Francisco, for instance.
“It’s really hard to get here,” Kirkpatrick said. “That’s one of the reasons we do so much video conferencing. Nobody wants to get stuck in Chicago and have to spend the night there.”