Leaders Uncertain About Effect of Nexus Acquisition on Poway

What’s next for Poway’s Nexus Biosystems Inc. now that the fast-growing firm has been

No one is quite sure, but city officials say they are concerned, as they should be.

The 6-year-old Nexus has been one of the big success stories for the city’s economy, especially during the recent downturn, along with defense contractor General Atomics, which is also in high-growth mode.

The chief financial officer at Brooks, a public company that makes the tools used to make computer chips, said Aug. 4 in a conference call with analysts after the second quarter earnings were released that the company would be making reductions ahead, but gave no details.

“We are integrating operations so that will reduce operating costs,” said Martin Headley, adding, "We will be taking other actions but final determination of these actions is not known at this time."

Brooks announced July 25 that it had acquired Nexus, which makes equipment to store biologic samples, for $79 million in cash, plus $6.7 million to cover cash held by the company.

The business has been booming as laboratories move to replace manual freezers with automated equipment.

At an sponsored by the Poway Chamber of Commerce, Mayor Don Higginson noted the positive impact that Nexus has had on the city’s business sector.

In the previous year, he said Nexus had doubled the amount of space it leases to 68,000 square feet from 30,000 square feet, solving “some of our leasing problems.”

But when asked Aug. 1 what the probably impact of the merger might be, he responded, “I don’t have a clue.”

He said the city’s economic development department was tracking the acquisition to see what the next step might be.

While Councilman Dave Grosch said he was checking with the city manager’s office into the possible repercussions, “because events of this type always have a potential impact.”

Alan Gin, an economist at the University of San Diego and a Poway resident, said the area shouldn’t be too worried at this time, given that the talent and expertise that helped build Nexus is based here not in New England.

“It is part of the life cycle of these businesses, some of the startups don’t make it, but those that do get a little bit firmer footing, and they become attractive targets,” he said. “If they keep operations in Poway it could be a solid result to the city, especially if you have a bigger company backing them.”

Nexus is currently located at 14100 Danielson St. in the Poway Business Park and on its website lists offices in Germany, Japan and Switzerland. Before leasing new space in 2010, the company had been located at 12140 Community Rd.

Meanwhile, Brooks has big plans for Nexus and for another company acquired earlier this year, though the company's CEO isn’t giving out details.

CEO Steve Schwartz said the acquisition was “an important next step” for the company and would help extend its reach into a new area of business.

“I don’t think they’re that far down the path, as it is pretty early in the planning stages,” said Barbara Culhane, a spokeswoman for Brooks, about executives' exact plans.

Culhane directed reporters to office “background notes” on the acquisition, which said Brooks is rolling Nexus into a new subsidiary to be called Brooks Life Sciences Systems, or BLSS.

The notes don’t say if Nexus will retain its name in the new subsidiary or if any employees would lose their jobs.

In Nexus, Brooks is acquiring a leader in extremely low temperature storage systems, or equipment that can store human tissue and related biologic samples as low as -176ºF for up to 30 years.

The company’s customers include major life sciences companies and universities and government agencies doing research.

The notes said Brooks’ executives are hoping to get into the market for biologic storage, which is growing more than 20 percent a year, by leveraging its expertise in semiconductor tools, as well as its recent acquisitions, to make the leap into life sciences.

Brooks also acquired RTS, a British life sciences business, in April for $3.3 million. The acquisition sells industrial-strength software, as well as equipment used in so-called biobanking. Brooks will move that business into its BLSS subsidiary.

John Lillig, previously the chief technology officer at San Diego-based Discovery Partners International, founded the company in 2005, which ironically merged with another Massachusetts company, Infinity Pharmaceuticals in 2006.

Poway Chamber of Commerce President Luanne Hulsizer said the city shouldn’t be too concern as businesses come and go, as mergers and acquisitions mostly turn out to be positive, and continue to grow and expand operations.

“We have to look at it as an opportunity,” she said. “And realize that Poway is a good place to do business.”