In keeping with its expectation,
Thermo Fisher Scientific
) completed the divestment of its Cole-Parmer customer channel
business to private equity firm GTCR, LLC. The deal was announced
in July under which GTCR agreed to purchase the Cole-Parmer
business for $480 million.
Based in Illinois, Cole-Parmer was part of Thermo Fisher's
Laboratory Products and Services segment. This business provides
fluid handling, test and measurement, and electrochemistry products
and services and generated a significant $230 million in the last
Taking into account the expected synergies from this divestment,
the company provided an updated annual guidance for 2014 during the
second quarter earnings call. While it added an expected $80
million in volume ($45 million of which is organic) for this
period, these increases are likely to be fully offset by a $90
million impact from the divestiture.
The Life technologies acquisition net of the divestitures
including Cole-Parmer is expected to contribute about 26 percentage
points to 2014 total revenue growth. Further, Thermo Fisher expects
the deal to have a negative impact of 3 cents on the company's 2014
adjusted earnings per share.
Following the colossal acquisition of Life Technologies, this
latest move by Thermo Fisher remains consistent with its strategy
to focus on its core segment. The company is currently emphasizing
on research, Specialty Diagnostics and applied markets. In
addition, the company is seeking to capitalize on growth
opportunities in Asia Pacific and emerging markets.
In March this year, Thermo Fisher divested three of its business
divisions to GE Healthcare, a unit of General Electric Co. (
), to comply with the closing conditions of the Life Technology
acquisition. Per the deal, GE Healthcare bought Thermo Fisher's
gene modulation, cell culture and magnetic beads businesses for
about $1.06 billion.
Thermo Fisher currently carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
While we remain at the periphery regarding Thermo Fisher at the
moment, investors interested in the medical instrument sector can
consider stocks like Edwards Lifesciences Corp. (
) and Hologic Inc. (
). Both the stocks sport a Zacks Rank #2 (Buy).
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