Thermo Fisher Scientific To Buy Life Technologies

Confirming weeks of rumor, Thermo Fisher Scientific announced this morning that it will acquire life sciences industry supplier Life Technologies for $13.6 billion, plus the assumption of about $2.2 billion in debt.

The acquisition will cement Thermo Fisher’s role as one of the largest suppliers of scientific instruments and consumables to the laboratory world. Life Technologies will add about $3.8 billion in annual sales to the $12.5 billion that Thermo Fisher posted last year. The deal will also significantly boost the role that lab consumables play at Thermo Fisher: 85% of Life Technologies’ sales last year were consumables and services, and only 15% were instruments.

Life Technologies has been pursued by a clutch of science supply companies and private equity firms since it announced in January that it had hired two investment firms to help it undertake a strategic review. Agilent Technologies, Danaher, and Sigma-Aldrich are said to have been among the rival bidders.

Thermo Fisher won the contest by offering to pay $76.00 per share in cash for Life Technologies, or 38% more than Life Technologies’ closing price on Jan. 17, the day before it announced the strategic review.

Despite the high premium, Thermo Fisher CEO Marc N. Casper says he expects the deal to add immediately to his company’s adjusted earnings per share. His prediction is based in part on the $250 million in cost synergies and $25 million in revenue synergies expected within three years after the deal closes.

One of the attractions of the deal for Thermo Fisher is Ion Torrent, a next-generation DNA sequencing technology firm that Life Technologies acquired in 2010. Life Technologies also offers qPCR genetic analysis and capillary electrophoresis instruments.

Stock analysts at Leerink Swann boosted their valuation of Thermo Fisher after the announcement. Given the lengthy strategic review process that’s already occurred, they don’t expect a higher offer to emerge.

The analysts also don’t expect significant antitrust concerns from the deal, because much of Life Technologies’ business will simply add to Thermo Fisher’s portfolio. However, they do expect that some smaller pieces of the combined company—Thermo Fisher’s Finnzymes molecular biology analysis and Hyclone cell culture products businesses, for example—might have to be sold to satisfy regulators.