Thermo Fisher Scientific has agreed to pay $4.2 billion in cash to buy the electron microscopy expert FEI. The acquisition will fill a gap in Thermo Fisher’s broad portfolio of chromatography, mass spectrometry, and gene sequencing instruments.
Thermo Fisher will pay $107.50 in cash for each FEI share, a 14% premium over the $94.58 closing price of its shares on May 26, the day before the deal was announced. Both companies’ boards of directors have already approved the deal. They expect it to close early next year pending regulatory and FEI shareholder approvals.
Marc N. Casper, Thermo Fisher’s CEO, says FEI’s electron microscopy platform, which includes scanning electron and transmission electron microscopes, fits well with his firm’s scientific tools. “In life sciences, there is a growing adoption of electron microscopy to study the structure of proteins,” he explains. “The technologies we gain with FEI will complement our mass spectrometry leadership.” Mass spectrometry is used for protein identification and characterization.
Oregon-based FEI has 3,000 employees, mainly in the U.S. and Europe, and had 2015 revenues of $930 million, including services and consumables. It will become part of Thermo Fisher’s analytical instruments business. Thermo Fisher had sales of close to $17 billion last year.
In terms of scientific instruments alone, the transaction will join number-one-ranked Thermo Fisher, which had $4.2 billion in sales last year, with number-17-ranked FEI, which had $484 million in sales, according to C&EN’s latest survey of the top instrument firms.
The deal widens the gap between Thermo Fisher and its nearest competitor, Danaher, which had $2.4 billion in instrument sales last year. The figures don’t reflect Thermo Fisher’s $1.6 billion purchase of gene analysis company Affymetrix, which was completed in March.
Buying FEI will expand opportunities for Thermo Fisher in the semiconductor market, where FEI’s nanocharacterization and nanoprototyping tools support development of small, complex devices. Last year, instrumentation competitor Bruker made its own push into the semiconductor market with the purchase of X-ray metrology expert Jordan Valley Semiconductors.
But the semiconductor market comes with challenges. “The acquisition does increase the cyclicality of Thermo Fisher’s business, since FEI is meaningfully exposed to the semiconductor business,” points out Leerink stock analyst Dan Leonard. On the other hand, “Thermo Fisher’s presence in life sciences could accelerate FEI’s aspirations to grow its life sciences business,” he says.
Aiding Thermo Fisher in the life sciences, FEI’s protein and molecular imaging microscopes could partially displace nuclear magnetic resonance instruments, which are used to determine the structure of molecules, notes analyst Eric Criscuolo of Mizuho Securities USA. Such a shift would impact Bruker, the market leader in NMR technology.