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Mesa Labs Takes Over SGM Biotech

Mesa Laboratories, a Colorado-based manufacturer of electronic instruments and disposables, has acquired SGM Biotech, a Montana manufacturer of biological indicator (BI) products. The acquisition expands and complements Mesa's existing offering of biological indicators through its Raven Labs division.

Under the terms of the transaction, Mesa Labs has acquired all of the outstanding shares of SGM for approximately $12m in cash, subject to certain net asset adjustments. In conjunction with the acquisition, Mesa will also be purchasing the building in Bozeman, Montana currently occupied by SGM.

According to Mesa, the addition of SGM is expected to increase its cash flow significantly. By realizing manufacturing synergies between SGM and Mesa’s existing BI division, the acquisition is expected to be accretive on both a cash and GAAP basis in subsequent fiscal years.

The companies said that the operational plan going forward will be to maintain both the SGM and Raven brands in the market, operating somewhat independently. Customers have established their testing protocols around a particular brand and, by maintaining differentiated positions of the two BI brands, it will minimize the impact this acquisition will have on end users. SGM’s BI manufacturing facility will be maintained in Bozeman, Montana, as will Raven’s in Omaha, Nebraska.

John Sullivan, president and CEO of Mesa Labs, said: “SGM has earned an enviable reputation in the BI market as an innovator and manufacturer of high quality products. By fostering collaboration between our two BI divisions, Raven and SGM, we expect to offer ever-expanding product lines to meet emerging sterilization trends in both industry and healthcare.

“By maintaining two distinct divisions, we will be able to offer redundancy in supply that cannot be offered by any other BI manufacturer. Redundant supply is a critical factor for many of our customers who use our BIs as an integral part of their sterile manufacturing process. I look forward to working closely with the SGM team in the months ahead as they integrate into the Mesa organization.”