Thermo, based in Waltham, Mass., will purchase California-based Life Tech for $76 per share in cash, which is about a $3 premium on what the shares were trading for when the market opened this morning. Thermo will also assume Life’s net debt at close, which was $2.2 billion at the end of 2012.
The CEOs from both companies have a long-standing relationship and the companies began working together through a commercial relationship in Europe, though the decision to integrate the companies “came through the strategic review a few months back,” Marc Casper, president and CEO of Thermo Fisher, said in the conference call this morning.
Well-known for its next-generation sequencing capability and a range of technologies for bioproduction, Life Tech will combine its offerings with Thermo’s analytical technologies and specialty diagnostics, creating opportunities to support the convergence of life sciences tools and diagnostics between the companies.
"Life has a strong portfolio of sera and media, as well as chromatography instruments and consumables for purification. This [is] highly complementary to Thermo Fisher’s single-use bioprocess technologies, including flexible disposable containers, and cell factories, which are used to grow cells for the production of vaccines and cell therapies," Karen Kirkwood, a spokeswoman for Thermo, told In-Pharmatechnologist.com.
ISI analyst Ross Muken said in an investor note that the deal should be viewed as a combination of two industry leaders, though management from both companies only expect Life Tech to grow by about 3% annually, and maybe 4-6% per year farther off in the future.
The companies will not look to add new R&D resources as part of the deal but new opportunities will arise from the integrated capabilities of the two companies, Casper said. He added that next Wednesday Thermo will provide updates on the effects of this transaction on its 2013 guidance.
Thermo expects some favourable tax breaks as a part of the acquisition, Casper, said.
A number of analysts on the conference call also questioned Casper on how Ion Torrent, perhaps the most prized and fastest growing piece of Life Tech, which focuses on DNA sequencing, will be integrated into Thermo.
Gregory Lucier, chairman and CEO of Life Tech said the Ion Torrent team is an autonomous unit in Life and there will be “no change as how we operate that business, as they continue to scale to our expectations.”
Casper also noted that Ion Torrent is growing much faster than some other parts of Life, but plans to spin it off into a separate company have not been discussed.
Ion Torrent CEO Jonathan Rothberg will also remain in his current role, Lucier said.