Tech takeovers leave mixed legacies

Ian Curry is a happy man, and with good reason.

The CEO of Ottawa life-sciences firm DNA Genotek is in charge of a company that saw its revenues grow by a hefty 43 per cent last year to more than US$20 million. In the past three years, the number of employees at the firm – which develops technology that allows DNA samples to be taken from saliva, rather than blood – has grown from 70 to 90.

“The company is doing well,” says Mr. Curry. “Our customers continue to be very happy with the products that we have on the market.”

DNA Genotek is a good-news story for another reason. It has kept expanding its local presence despite being taken over by an American company, something that hasn’t always been the case in Ottawa.

Founded in 1998, DNA Genotek was sold to U.S.-based OraSure Technologies for US$53 million in 2011. At the time, Mr. Curry was bullish on the transaction, arguing that having the power of a public company behind it would allow DNA Genotek to continue growing.

History has proven him right.

“Lots of people have other stories about acquisitions,” says Mr. Curry, who reports directly to OraSure president and CEO Douglas Michels rather than a board of directors. “This one has been really, really positive, I think, for all parties involved.”

DNA Genotek’s success story will surely be music to the ears of the head honchos at Nordion, another local tech firm that is on the verge of being bought out by a U.S. company.

The medical isotope provider’s potential takeover by Illinois-based Sterigenics International has been making headlines for months.

Nordion’s board agreed to the sale in March after exploring “strategic alternatives” for more than a year. Last week, Sterigenics’ shareholders also signed off on the US$811-million deal, which still requires federal government approval.

Assuming that hurdle is cleared, the venerable Ottawa company will soon be in the hands of a new owner.

As DNA Genotek has proven, sometimes that works out well for the city’s tech community – but not always. When takeovers result in downsizing and the loss of locally headquartered executives, it can hurt the city’s ability to develop and nurture the next generation of tech startups.

In 2010, San Jose-based Sanmina-SCI bought local manufacturing firm BreconRidge Corp. for US$53 million, the same price OraSure paid for DNA Genotek. Unfortunately, there weren’t as many similarities when it came to how the local operations were integrated into their larger U.S. parent’s.

A year after the sale closed, in May 2011, former BreconRidge executives who stayed on still sounded a positive note.

“They didn’t do (the acquisition) to strip us out, but to grow us, and that’s the only message I’ve received throughout,” former BreconRidge president Cyril McKelvie told OBJ at the time.

Just four months later, Mr. McKelvie, then the company’s top Kanata official, was out of a job after Sanmina issued pink slips to an undisclosed number of employees, citing “economic conditions.” Today, the firm has about 350 local employees, down from more than 500 before the layoffs.

Nordion, which has a headcount of about 400, says it’s too early to comment on any potential job losses. The company says it will remain a standalone business within Sterigenics, and its operations will remain in Ottawa under the same name.

“We expect to work through the transition planning over the coming months,” company spokesperson Tamra Benjamin said in an e-mail to OBJ.

Nordion can only hope the transition goes as smoothly as at DNA Genotek.

“The integration has been seamless,” Mr. Curry says. “That may sound too good to be true, but I’m a lucky guy, I guess.”