IDEX Corporation announced this week that it has entered into a definitive merger agreement to acquire Microfluidics International Corporation for $1.35 per share, or $14 million, in cash. The transaction is expected to close in the first quarter of 2011. Headquartered in Newton, Massachussetts, Microfluidics International achieved $16 million in revenue in 2009. Microfluidics will operate as a stand-alone business within the IDEX Fluid and Metering segment.
Microfluidics International designs and manufactures laboratory and commercial equipment used in the production of micro and nano scale materials for the pharmaceutical and chemical markets. According to the companies, Microfluidics’ product and service offerings will enhance IDEX’s microfluidics and micro particle technology position.
The $1.35 per share cash purchase price represents a premium of approximately 69% over Microfluidics’ volume-weighted average share price during the 30 trading days ending January 10, 2011, the last trading day prior to this announcement, and a 75% premium over Microfluidics’ volume-weighted average share price during the 90 trading days ending January 10, 2011.
The merger agreement provides for a wholly-owned subsidiary of IDEX to commence a tender offer to purchase all outstanding shares of Microfluidics. The Microfluidics Board of Directors unanimously determined that the offer and the merger are fair to and in the best interests of Microfluidics and its shareholders. The Board approved, adopted and declared advisable the merger agreement and the transactions contemplated by the merger agreement, including the offer, and recommended that holders of shares of Microfluidics common stock accept the offer and tender their shares in the offer.
Irwin Gruverman, the founder and a major shareholder of Microfluidics, as well as each of Microfluidics’ directors and executive officers, have agreed to tender their shares in the offer; these stockholders own shares representing approximately 16% of the outstanding shares of Microfluidics at December 31, 2010.
The merger agreement provides for a two-step transaction. The first step will be a cash tender offer for all outstanding Microfluidics common stock, which is expected to commence in January 2011. In a second step merger, any untendered shares of Microfluidics common stock (other than those of dissenting holders) will be converted into the right to receive the same price paid in the offer. The tender offer and merger are subject to the satisfaction of customary closing conditions, including successful tender of a majority of the outstanding shares of Microfluidics common stock. According to Microfluidics, there are no financing or regulatory conditions to the consummation of the transaction, nor is the transaction subject to approval by the shareholders of IDEX.
Commenting on the transaction, IDEX Chairman and Chief Executive Officer Larry Kingsley stated, "We are thrilled that Microfluidics has decided to join the IDEX team. Microfluidics’ leading technology in particle size reduction and nanoparticle creation adds enabling technology to one of our key platforms supporting pharmaceutical research and production. Combining Microfluidics with our Quadro and Fitzpatrick pharma platform will allow for significant growth opportunities across the globe. We welcome the Microfluidics team to IDEX."
Microfluidics’ Chief Executive Officer Michael C. Ferrara stated, "Microfluidics has completed a significant transformation— evolving into an innovative, efficient and financially stable technology provider with a robust product line that continues to serve as the gold standard for nanomaterials processing, particularly for pharmaceutical applications. As we look to the future, we believe the full potential of our technology can best be realized by a larger company with robust sourcing and distribution channels and complementary lines of innovative products. We are confident that IDEX -- known as a global leader in the fluidics field across multiple platforms -- is the ideal partner for Microfluidics. We believe that this proposed acquisition best meets the evolving needs of our global customers while also producing the value and liquidity that our shareholders deserve. We look forward to working with IDEX to complete the transaction in the first quarter of 2011."
Latham & Watkins LLP and Hodgson Russ LLP represented IDEX in the transaction. America’s Growth Capital, LLC served as the financial advisor to Microfluidics and provided a fairness opinion to the Microfluidics Board of Directors. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. served as legal counsel to Microfluidics.
In related news, the law firm of Levi & Korsinsky, LLP launched an investigation this week into "possible breaches of fiduciary duty" by the board of Microfluidics International Corporation in connection with the sale of the company.
According to Levi & Korsinsky, the investigation concerns whether the Microfluidics Board of Directors breached their fiduciary duties to Microfluidics stockholders by failing to adequately shop the Company before entering into this transaction and whether IDEX is underpaying for Microfluidics shares, thus unlawfully harming Microfluidics stockholders.
IDEX Corporation is an applied solutions company specializing in fluid and metering technologies, health and science technologies, dispensing equipment, and fire, safety and other diversified products built to its customers' exacting specifications. Its products are sold in niche markets to a wide range of industries throughout the world.
Microfluidics International provides products for uniform particle size reduction, robust cell disruption and bottom-up nanoparticle creation. Used primarily by pharmaceutical, biotechnology, chemical, cosmetic, nutraceutical, food and energy companies to research, develop and improve products with efficient processes, more than 3,000 of the company's processors are installed at customer sites in 50 countries around the world.
By producing smaller particle sizes and a more narrow distribution than other technologies, Microfluidics International Corporation says that it "enables companies to create tiny particles that achieve big results".