Affymetrix Inc. ( AFFX - Analyst Report ) recently declared the pricing of its unsecured 4.00% Convertible Senior Notes in the principal amount $105 million, due 2019. The notes will be converted into the company’s common stock at an initial conversion price of roughly $5.88 a share.

Morgan Stanley ( MS - Analyst Report ) and Citigroup ( C - Analyst Report ) are acting as joint book-running managers for the notes offering while Baird and BofA Merrill Lynch, a unit of Bank of America ( BAC - Analyst Report ) , are co-managers.

The announced conversion of every $1,000 principal notes into roughly 170.0319 common shares of Affymetrix represents a premium of about 25% to the company’s stock price on June 19 on the NASDAQ Global Select Market. To cover prospective over-allotments, under the same terms and conditions, the company allowed the underwriters to buy up to $10 million principal amount of additional notes.

The company will use the total proceeds to finance a part of its impending acquisition of eBiocience Holding Company, Inc. Affymetrix, in late 2011, announced its acquisition of privately-held eBioscience, for $315 million. The transaction is expected to be complete by the end of second quarter of 2012. In case, the deal doesn’t work out, Affymetrix’s management decided not to redeem the notes but utilize it for some other undisclosed purpose.

San Diego, California-based eBioscience is a global leader in immunology and oncology flow cytometry reagents. It offers a vast selection of antibodies, enzyme-linked immunosorbent assays (“ELISAs”) and proteins for life science research and diagnostics. eBioscience is an industry leader in flow cytometry (a technique for analysing microscopic particles) and immunoassay reagents for immunology and oncology research and diagnostics.

The acquisition will significantly boost Affymetrix’s foothold in the fast-growing immunology, oncology and translational medicine markets, representing an annual opportunity of nearly $3 billion. It will diversify the company’s revenue base, expand its product range (to include a vast array of reagents) and reinforce its growing molecular diagnostics business.

However, Affymetrix is exposed to a volatile funding environment. The company has been beset by uncertainties surrounding National Institutes of Health (“NIH”) funding. Decline in government research grants may substantially affect the company’s revenues.

Affymetrix is operating in an intensely competitive industry and faces risks associated with lower research and development (R&D) spending by its customers due to a soft economy and government actions including budget cuts.