PerkinElmer Inc., a Waltham company that sells an array of life sciences instruments and services, unveiled plans late yesterday to buy ViaCell Inc. of Cambridge for $300 million to bolster its genetics-screening business for pregnant women and newborn children.
Although ViaCell is probably best known for developing new drug therapies from stem cells, PerkinElmer said it was attracted by ViaCell's growing business to help families preserve newborn babies' umbilical cord blood for possible medical use. Umbilical stem cells are currently used to help treat more than 40 diseases, including blood cancers and genetic diseases, raising the hopes that banking the blood could eventually help treat ill children, perhaps as an alternative to a bone marrow transplant.
ViaCell expects to generate less than $70 million in sales this year from its blood-banking business, called ViaCord, but PerkinElmer estimates the total US market for such a service could reach more than $1 billion within the next five years.
PerkinElmer's chief executive, Gregory L. Summe, said ViaCord is an excellent fit with its own genetics-screening business, which is expected to account for more than 10 percent of PerkinElmer's $1.7 billion in annual sales and has been growing faster than PerkinElmer's business as a whole.
Summe said PerkinElmer's global presence and better resources could help ViaCell's blood storage business to grow even faster than its current annual rate of more than 20 percent. Conversely, Summe said, the deal gives PerkinElmer something it lacks - a consumer marketing group - that could potentially help PerkinElmer start marketing its genetic tools directly to families expecting a child, instead of just to doctors and hospitals.
Summe noted that doctors don't always order the full range of genetic tests that PerkinElmer is able to provide for fetuses or newborn babies.
"This business is very complementary with our own business," Summe said of ViaCell. "There's no overlap. And it extends our existing product range."
But Summe said PerkinElmer plans to sell ViaCell's high-profile drug-discovery unit, which would have taken PerkinElmer in a new direction. PerkinElmer now supplies a sophisticated range of equipment to drug companies, including Novartis AG and Wyeth, but hasn't been interested in developing drugs itself. By contrast, ViaCell is working on a number of experimental treatments using stem cells to treat cancer, heart disease, and diabetes.
PerkinElmer also said it plans to sell ViaCyte, a service ViaCell has been developing to help women freeze unfertilized eggs so they could eventually have a child. Last month, EMD Serono Inc., part of Merck Serono SA, agreed to help support ViaCyte's development.
Summe said he doesn't expect it will be difficult to find a buyer for the therapeutics business, since ViaCell already has formed partnerships with several major companies, including Amgen Inc., a large biotech company.
Under terms of the deal, PerkinElmer agreed to pay $7.25 per share, a 52 percent premium above ViaCell's closing price of $4.77 yesterday, and also above ViaCell's 52-week high of $6.74. The deal was made public after the market closed yesterday.
PerkinElmer has 8,500 employees, including nearly 550 in Massachusetts, mainly in Boston, Salem, and Waltham. ViaCell has 280 employees, including 170 in Cambridge.
Summe said the deal will probably result in few layoffs and a burst of hiring.
"This is strictly about growth," he said. He said the company plans to operate ViaCell independently, but will provide it with additional resources to help "accelerate" its growth.
Summe said the deal, expected to close this year, will probably decrease 2008 earnings per share, but lift earnings starting in 2009.
Todd Wallack can be reached at firstname.lastname@example.org.