2008-11-25 00:37:01 -

On Nov. 21, 2008, Invitrogen Corp. and Applied Biosystems Inc. completed their previously announced merger to form a new company named Life Technologies Corp. In a press release dated Aug. 4, 2008, Fitch assigned the following ratings to the merged entity:
--Issuer Default Rating (IDR) 'BBB-';
--Senior convertible notes 'BBB-';
--Senior secured credit facilities 'BBB-'.
The Rating Outlook is Stable.
Life Technologies' ratings are supported by the company's strong cash flows, leading market position, diversified customer base and low capital expenditure needs. The company benefits from the recurring nature of its revenue stream (over 70% of total revenues are from consumables and services), strong customer loyalty, and the nature of

its end markets (tied to general health care spending and biological research). Key ratings concerns center on integration risks post-merger as well as the high levels of debt and leverage expected. Fitch's ratings incorporate the expectation that the company will reduce debt over the next one to two years to a level more appropriate for the rating category (under 3.0 times (x)).
Fitch believes the complementary nature of the successor companies' product lines will enable the realization of revenue synergies post-merger. Life Technologies will be able to offer more bundled product solutions, including complementary instruments and reagents, which are increasingly important to life science researchers and applied markets customers. In addition, Fitch believes the company will have the opportunity to leverage existing customer channels (such as Invitrogen's Supply Centers) and complementary research & development projects to drive revenue growth. Facility rationalization, overhead reduction, and consolidation of marketing activities, among other activities, should lead to the realization of cost synergies as well. In addition, Fitch believes there is significant growth potential for the life sciences tools industry in general as well as the company's targeted market segments in particular (such as next-generation DNA sequencing).
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