Biotechnology giant Sigma-Aldrich Corporation (SIAL) has acquired all outstanding shares of Vetec Quimica Fina Ltda. essentially to fortify the company's position in Latin America. Terms of the purchase were not disclosed.
With the latest acquisition of Vetec Quimica, Sigma hopes to make its presence felt in the emerging markets and also to gain control over the economies afforded by producing and packaging products where its customers reside.
Further, the partnership will not only allow the company to broaden its distribution channel in Brazil but will also help Sigma to prepare customized products to match the special requirements of the market. It will also enable it to localize its supply chain.
Based in Brazil, Vetec is a leading supplier of high quality specialty chemicals for the academic and industrial markets and brings with it more than 3000 products. Vetec will also provide Sigma with personnel having more than 30 years of technical experience apart from its purification and packaging of high quality chemicals for laboratory and manufacturing applications.
With its sound reputation for superior service and quality, Vetec has been ISO certified since 2003. The company employs more than 200 employees at its Xerem location near Rio de Janiero.
St. Louis, Missouri-based Sigma-Aldrich Corporation is a leading life sciences and high technology company. It develops, manufactures and distributes various biochemicals and organic chemicals.
Apart from acquisitions, in order to enhance its growth, Sigma-Aldrich plans to increase its focus on marketing, business development, R&D, full leverage of its sales force, thus continuing with its efforts to improve process and operations management.
Recently, the company delivered its first quarter 2011 earnings of 97 cents, which surpassed both the Zacks Consensus Estimate of 89 cents and the prior-year earnings per share (EPS) of 81 cents.
Reported sales in the first quarter of 2011 were $632 million, increasing 10% year over year and outperforming the Zacks Consensus Estimate of $607 million. Excluding a 2% impact from currency exchange rates and 1% from acquisitions, first- quarter organic sales growth was 7%.
For full-year 2011, the company reiterated its organic sales to grow in the mid-single digit range. The company anticipates that this organic growth, along with benefits from currency and acquisitions would drive overall growth to low double digits.
The company is on route to execute its strategic initiatives to drive sales of its Research business and to deliver high single digit organic growth in SAFC for the full year and enhance the e-commerce and Asia Pacific-Latin American market sales.
Based on the strong operating performance in the first quarter of 2011 and more favorable foreign currency exchange rates, Sigma increased its diluted adjusted EPS outlook for 2011 to a new range of $3.60 to $3.75 (excluding the impact of restructuring and other extraordinary special charges) higher than the previous expectation of $3.45 to $3.60.
Sigma-Aldrich faces stiff competition from Bayer AG (BAYRY) and privately held companies Brenntag AG and VWR International, LLC.
We currently maintain a Zacks #2 Rank (short-term Buy recommendation) on Sigma and a long-term Neutral recommendation.
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