Ambry Genetics Corp., a closely held genetic diagnostics company in Aliso Viejo, just sold for $800 million—maybe more. The Japanese photocopier and printer maker Konica Minolta signed a definitive agreement to buy the Aliso Viejo-based company comprised of $800 million upon closure and an additional payment of up to $200 million over the next two years if certain financial goals are met.
The deal is expected to close by year-end.
The purchase is partly funded by Innovation Network Corp., a public-private partnership comprised of the Japanese government and 26 major corporations. Konica and INCJ will invest 60% and 40%, respectively.
“The main reason for finding a partner is to progress scientific knowledge and make progress—I have no doubt that we could have done it ourselves [expanding to international markets], but we can just move that much faster with the right partner,” said Chief Executive Aaron Elliott.
The Tokyo firm plans to bring Ambry’s capabilities first to Japan, and then to Europe, according to a company press release. Elliott said he anticipates to entering and setting up operations in Japan mid- to late next year.
OC
Ambry will remain headquartered in Aliso Viejo and continue to operate under its own name. The company has over 700 employees, over 500 of them in OC.
A memo to employees said Ambry’s management team is expected to “continue leading Ambry operations after the closing” with “no significant job reductions” because of “the minimal overlap” of the companies.
Founder Charles Dunlop added that “Orange County is also an important talent pool for Ambry.”
“That is another reason why we like Konica as a partner. There were a lot of interested parties, and some had more synergy than others, but one thing we wanted to take into account was Ambry employees,” said Elliott, noting that the genetic-testing business is a new space for Konica. “There is really no overlaps, no redundancy [of personnel.]”
Bidders included clinical laboratory services provider Quest Diagnostics in Madison, N.J., sources familiar with the transaction told the Business Journal.
Indeed, while Konica has an existing healthcare arm as part of its strategy to diversify and boost revenue from its printer business—primarily with its X-ray diagnostic imaging systems, ultrasounds and other diagnostic devices—buying Ambry opens the door to “create an exciting new medical platform aimed at fulfilling the potential of precision medicine,” according to Konica’s press release.
Synergy
Ambry’s suite of genetic testing for inherited and noninherited diseases compliments Konica’s High Sensitive Tissue Testing, a proprietary cancer-detecting technology using fluorescent nanoparticles.
“By combining [Ambry’s] DNA testing with Konica’s protein-based testing, we can better detect mutation and determine the cause of that mutation,” Elliott said.
Ambry has identified more than 45,000 mutations in at least 500 different genes, according to the company.
Elliott pointed out that the genetic-testing industry is currently limited with data. There are very few companies that have global presence and, most of the collected data are of the Caucasian population.”
“The more data you have on a disease, the more chance you have of correctly identifying the mutation. We’ll be in a much better position—our database will be immediately impacted—once we enter the Japanese market.”
The Founder
“I’m a local kid. I grew up in Laguna Beach. This is a win for OC. We sold a company for $1 billion. Huge win for OC,” Ambry founder Charles Dunlop said.
Dunlop, who is a pioneer in genetic testing and medical ethics, is proud of the company he started and the work Ambry does. He launched his genetic-testing company in 1999 with as little as $500.
Dunlop resigned as CEO when he was diagnosed with stage four cancer three years ago.
Three years later the cancer is in remission. And in selling to Konica Minolta, he believes he found the perfect partner.
“I was trying to find the right solution for everyone: shareholders, employees, clients, and we get to continue the science,” Dunlop said. “This is not a slash and burn. These are good guys [Konica Minolta].”
Dunlop owns about half of Ambry. He will stay on with the combined entity—terms to be negotiated.
As for his pending payday: “I’m not a spender kind of person. I feel like the bricks are off my shoulders and that they can grow the company,” Dunlop said.
Forward
Elliott said the deal will move forward once antitrust regulators in China and Europe sign off. He said that should not take longer than three months.
Ambry retained Intrepid Investment Bankers LLC to explore a sale of the company last July, according to Elliott. INCJ is capitalized at 300 billion yen—roughly $2.6 billion—with the Japanese government providing over 95% of the capital. It has the ability to invest up to $18 billion across a wide range of sectors, including green energy, electronics, biotechnology, and infrastructure development.
