Thermo Fisher Scientific has reached a deal to acquire Patheon for $7.2 billion, including debt. The transaction will take Thermo Fisher, a leading maker of scientific instruments and lab supplies, into a completely new market: pharmaceutical contract development and manufacturing.
The deal, which is expected to close at the end of this year, combines Thermo Fisher, which has 55,000 employees and annual sales exceeding $18 billion, with Patheon, which has 9,000 employees, mostly in the U.S. and Europe, and annual sales of $1.9 billion.
Patheon will become part of Thermo Fisher’s laboratory products and services segment when the transaction is completed.
Patheon was created in late 2013 when the Dutch chemical maker DSM agreed to combine its active pharmaceutical ingredients business with the original Patheon, a Canadian contract formulator of drugs in finished dose form. Patheon was majority owned by the private equity firm JLL Partners.
Today, DSM and JLL together own 73% of Patheon’s shares. They have agreed to accept Thermo Fisher’s $35.00-per-share offer, which is a 66% premium to the $21.00-per-share price at which the two sold shares to the public last July and a 35% premium over Patheon’s share price last Friday, before the transaction was announced.
Thermo Fisher CEO Marc N. Casper calls Patheon’s development and manufacturing capabilities an “excellent complement” to what Thermo Fisher already offers to the biopharma market.
By acquiring the leading contract development and manufacturing firm, Thermo Fisher gains entry into a $40 billion market, points out Thomas Loewald, Thermo Fisher’s chief commercial officer. Backed by Thermo Fisher, Patheon will be an even stronger partner to big pharma customers, he tells C&EN.
Until recently, Thermo Fisher’s acquisitions have bolstered its existing instrumentation franchise. Last year, for instance, it acquired electron microscopy expert FEI and the gene analysis expert Affymetrix.
But by undertaking such an unexpected combination, Thermo Fisher highlights its willingness to move beyond life sciences tools “into areas that are upstream,” even if that includes acquiring potential customers, observes Puneet Souda, a stock analyst at the investment firm Leerink.