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Accelrys, Symyx agree to informerger
SAN DIEGO—Accelrys Inc. and Symyx Technologies Inc. have signed a merger agreement, due to be finalized by the end of June—subject to customary closing conditions and shareholder and regulatory approvals, of course—that will reportedly establish an end to-end, integrated informatics software system.
Max Carnecchia, CEO of Accelrys, will serve in the same capacity for the combined companies. Isy Goldwasser, currently CEO of Symyx Technologies, will assume unspecified responsibilities in what is being called a transitional role. The company will be headquartered at Accelrys' location in San Diego. The merger, structured as a tax-free, all-stock merger of equals, has been approved by both companies' boards of directors.
"Scientific R&D organizations are challenged by the need to increase productivity and performance while grappling with budget pressures, restructuring, changes in scientific processes, and globally dispersed operations," Carnecchia says "What we are looking at is fundamental changes in how discovery is done. These forces are creating profound changes in the way R&D teams interact. New software solutions are urgently required to address these fundamental changes, and the merger of Accelrys and Symyx creates a new, leading-force in the industry to address this situation."
On a combined basis, Accelrys and Symyx have a pre-announcement market capitalization of approximately $335 million, cash reserves of approximately $150 million (net of transaction costs), and no debt. Under the terms of the agreement, Symyx shareholders will receive 0.7802 shares of Accelrys common stock for each share of Symyx. Following the completion of the merger, Accelrys and Symyx shareholders will each own approximately 50 percent of the combined company. After a period of initial integration, full year net cost synergy savings are expected to be in the range of $10 million to $15 million. Additionally, Accelrys expects the transaction to be materially accretive to non GAAP earnings per share.
Aside from the dollar figures, Carnecchia notes that Accelrys' Pipeline Pilot and Symyx's electronic lab notebook (ELN) product together help create a much more 'holistic' platform.
Dr. Frank Brown, Accelrys' chief science officer, explains what is meant by 'holistic' by saying, "If you think about research as planning, doing the experiment, analysis and reporting, then each of the companies bring different strengths in order to create an integrated informatics system. Big Pharma is now doing the integration in a hard-wired way. Every upgrade or new software version by a vendor disrupts the process. By removing this impediment, we can now lower the total cost of ownership for our customers." A separate collaboration between Symyx and Simulations Plus will add another piece to the ecosystem, he says, in the area of preclinical modeling.
When Carnecchia joined Accelrys in June 2009, the two partner-to-be companies already knew each other well and had collaborated over much of the past 15 years. After a couple months to get his "sea legs," as he puts it, Carnecchia recognized that the profound changes going on in drug discovery had created new needs for the coming decade. "Symyx's CEO Isy Goldwasser and I shared a very common vision," he says. "so we were able to put together a more comprehensive and complete software stack."
From Goldwasser's perspective the merger of Accelrys and Symyx creates a differentiated company "that is uniquely qualified to advance the state of the scientific informatics software industry. No other company combines our deep domain knowledge in chemistry, biology and materials science, enterprise software capabilities (in scientific data management, decision support and analytics), professional expert services, and a broad choice of partners. This powerful and synergistic combination with Accelrys allows us to meet the changing needs of our customers by delivering more agile, flexible and open scientific R&D environments through adaptive end-to-end workflow solutions."
The integrated package will be provided in what is expected to be a mix of subscription and perpetual licensing arrangements, both on premises and as hosted 'cloud' offerings.
Currently based in Santa Clara, Calif., Symyx products include a market-leading electronic laboratory notebook (ELN), decision support software, chemical informatics and sourcing databases. ELN is expected to enjoy a 20 percent compounded growth rate over the next several years, with the market reaching $1.5 billion in annual sales in 10 years. The company also enhanced its value as an informatics partner by winding down its CRO services business and spinning off its instrument hardware operation to management personnel as FreeSlate Inc.
Fellow California company Accelrys, headquartered in San Diego, develops scientific business intelligence software and solutions for the life sciences, energy, chemicals, aerospace, and consumer products industries. Customers include many Fortune 500 companies and other commercial entities, as well as academic and government entities. Accelrys' portfolio includes computer-aided design modeling and simulation offerings which assist customers in conducting scientific experiments in silico in order to reduce the duration and cost of discovering and developing new drugs and materials. The Accelrys platform can be used with both Accelrys and competitive products, as well as with customers' proprietary predictive science products.