Update: ISP Concedes Defeat as Dexter Seals Deal With New Merger Partner

It's all over but the legal details. Sunday night, after the afternoon announcement that Dexter Corp. (DEX) had found a merger partner to keep it out of the clutches of International Specialty Products (ISP), sources close to ISP confirmed that the Wayne, N.J. company is dropping its proxy solicitation and withdrawing its $45-per-share tender for Dexter. "In light of Dexter's announcement this afternoon of a Life Technologies (LTEK) transaction which should provide Dexter shareholders with value in excess of $45 per share, as promised we have agreed to step aside,"said ISP Chairman Samuel J. Heyman in a statement.

Thus ends an 18-month battle that saw the dismemberment of Dexter to avoid ISP's hostile takeover attempt.

Dexter announced earlier today that it has agreed to be acquired by Invitrogen (IVGN), a genetics research company. The $1.9 billion transaction comes on the heels of two previous spinoffs by Dexter, aimed at fending off ISP's unsolicited bid.

Under terms of the deal, all outstanding shares of Dexter will be converted into $62.50 per share in cash and Invitrogen stock, the Windsor Locks, Conn. maker of specialty chemicals said. The deal will combine Dexter with Invitrogen, which will also purchase Life Technologies, now 75%-owned by Dexter. Life Technologies makes equipment for life sciences and biotech companies. In addition to cash and Invitrogen shares worth $62.50 per Dexter share, Dexter says, holders of Life Technologies stock will receive $60 per share.

Invitrogen, based in San Diego, also makes supplies for biotech research and, in a statement, says that the deal will produce a leading company in the field with $500 million of annual revenue and $100 million in operating cash flow.

Donaldson Lufkin & Jenrette advised Invitrogen and Lehman Brothers advised Dexter.

The mechanics of the deal will be noteworthy, if indeed this ends the bid by ISP, which was spun out of privately held GAF Corp. Financier Samuel Heyman chairs both ISP and GAF Corp.

According to a statement to shareholders urging them to reject the ISP bid, Dexter Chairman and CEO K. Graham Walker said: "This is the same group that has prevented Dexter from acquiring full ownership of Life Technologies Inc., its 75%-owned subsidiary. Full ownership of Life Technologies was envisioned as critical to broader participation in the fast-growing life sciences market and would have unlocked the value so clearly deserved by Dexter shareholders. Under these difficult conditions, Dexter has decided that it is in the best interest of everyone concerned to begin a process of evaluating all alternatives to maximize shareholder value in the short term." On June 30, Dexter's board officially voted down the ISP Offer.

ISP, which says there has been no formal agreement between it and Dexter yet, points out that the bid elevated shares of both Dexter and Life Technologies. Before the December bid, Dexter was trading at $27 and Life Technologies at around $37.

"Should Dexter shareholders be able to realize the stated value of the offer, this is a great victory for Dexter shareholders for which we have been working for quite some time," Heyman said in his statement. "Pending further review of the transaction and market developments, we will continue to monitor the situation and take whatever action we deem appropriate in the interest of all shareholders."

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