Very often in biotechnology, the instrumentation makers and diagnostic companies are forced to play second fiddle to the hot young pharma-wannabees. Yesterday, however, the biotechnology news was abuzz with the announcement that instrument maker Beckman-Coulter (NYSE:BEC) would be acquiring medical diagnostic company Biosite (NASDAQ:BSTE) for $1.55 billion. The purchase price of $85 per share represented a 53.5% increase over Biosite's prior-day closing price. Not surprisingly, the company's share price jumped yesterday to close just below the offer price at $83.80.

The market was not so kind to purchaser Beckman-Coulter, sending the share price down nearly 7% to $62.51. The sell-down was largely due to concerns that at near 40 times earnings, the company overpaid for Biosite. Also of concern is that Beckman-Coulter would be taking on additional debt to finance the acquisition, and that the company acknowledged that the merger would not likely add to earnings until 2008.

Aspects of the merger are attractive. Biosite owns the higher-margin business, which should improve profitability for Beckman-Coulter in the future. Biosite's clinical diagnostic immunoassays also provide an attractive consumable product line that complements Beckman-Coulter's laboratory automation instrumentation.

Beckman-Coulter has always appealed to me as one of those rare biotechnology companies that pays out a steadily growing dividend. I won't be running out and buying shares in the company; I prefer to watch from the sidelines and see how the integration proceeds over the next few quarters. But I do find the merger attractive enough that yesterday, I selected the company to outperform the market over the next couple of years in Motley Fool CAPS, our investor-driven stock rating service.

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Fool contributor Ralph Casale plays a biotechnology/health-care CAPS portfolio with a somewhat sad rating of 34.5. He is a biochemist by trade and holds no financial position in any of the firms mentioned. The Motley Fool has a disclosure policy.