Bio-Techne Acquires Trevigen In All Cash Deal

| About: Bio-Techne Corp. (TECH)

Summary

Bio-Techne has announced the acquisition of DNA test supplier Trevigen for an undisclosed sum.

Trevigen provides a family DNA testing capabilities to determine damage and repair.

The deal is a smart move by Bio-Techne, as it solidifies its supply of complementary testing services.

Quick Take

Diagnostics technology company Bio-Techne (TECH) has acquired Trevigen for an undisclosed sum in an all cash transaction.

Trevigen provides a range of DNA damage, repair and related testing assays to researchers and clinicians.

The deal is complementary for Bio-Techne and should be a win in the medium-term as the firm solidifies its product portfolio with the acquisition.

Target Company

Gaithersburg, Maryland-based Trevigen was founded in 1992 to provide researchers with tools to learn about DNA damage and repair.

The firm expanded into reagents, slides and protocols for assay-based testing.

Management is headed by CEO Dr. Michael Elliott, who co-founded the firm with Dr. Jack Cirkjian.

Below is an overview video of Trevigen’s Comet Analysis software system:

(Source: TREVIGEN)

Trevigen’s primary offering is focused on its Comet system for analyzing cell stress and DNA damage, but also includes its Cultrex system for recreating ‘tissue microenvironments to elicit in vivo structure and function for cells in vitro.’

The firm also provides contract services through its Trevigen Cell Assays group it established in 2008.

Trevigen had no publicly disclosed private investment rounds.

Acquisition Terms and Rationale

Neither company disclosed the acquisition price or terms other than it being an ‘all cash’ deal.

Bio-Techne did not file an 8-K, but it did say that the transaction ‘is expected to be accretive to Bio-Techne’s adjusted earnings per share for its fiscal year 2018.’

The use of an ‘adjusted’ EPS figure is a common one in that it tends to make the deal look better than it would under more standard GAAP measurements.

The two companies were well-known to each other before the deal, as Bio-Techne had sold the Trevigen product line ‘for many years.’

Stated rationales for the deal revolve around Trevigen’s products being complementary to Bio-Techne’s and needing to adjust to changes in DNA testing markets.

As Bio-Techne’s President and CEO Charles Kummeth stated in the deal announcement,

The Trevigen products complement our current product portfolio and make it easier to reach customers interested in products to better understand cell behavior and genotoxic events on cells. Having tools to study DNA damage and the apoptotic cell process is an important aspect of understanding drug action. As more drug testing is being conducted on physiologically more appropriate cell models, including 3D cell cultures, having membrane extracts products to support the robust growth of such cells, such as the Cultrex product line, makes these products an important addition to the Bio-Techne product line.

The deal is also interesting in the sense that if Bio-Techne was already selling Trevigen’s products, what is the main benefit of bringing them in-house?

Perhaps Bio-Techne’s management sees an opportunity to continue product development and increase pricing power, thus bringing a higher return.

Also, the chance that Trevigen’s founders wanted to sell, and Bio-Techne needed to step up to avoid losing the product line to a competitor can’t be discounted.

In any event, the deal represents virtually no integration risk due to the significant existing relationship between the two firms, so the deal should be a positive for Bio-Techne in the medium term.

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