Shares of scientific instrument maker
Thermo Fisher Scientific Inc.
) rallied 2.05% on Tuesday as the company announced that it has
inked a deal to divest 3 of its business divisions to GE
Healthcare, a unit of
General Electric Co.
Per the deal, GE Healthcare will buy Thermo Fisher's gene
modulation, cell culture and magnetic beads businesses for about
$1.06 billion. The acquisition is expected to close in the
first half of 2014.
This sell-out is vital from Thermo Fisher's point of view as
the successful completion of this deal is necessary to expedite
the European Commission's (EC) approval for the impending mega
Life Technologies Corp.
Notably, the company got the approval from European Commission
last November. However, it was subject to certain criteria
including the divestment of TMO's cell culture (sera and media),
gene modulation and magnetic beads businesses. Collectively,
these businesses, as part of TMO's Analytical Technologies
segment, are expected to generate revenues of $250 million in
Besides this approval, Thermo Fisher also needs certain
additional regulatory go-aheads to close the LIFE takeover. This
includes a clearance from the U.S. Federal Trade Commission
(FTC). The company is currently working on completing this
transaction by early 2014.
Earlier in August, more than 98% of the shareholders of Life
Technologies (representing more than 72% of the company's
outstanding shares) had voted in favor of this merger agreement.
On Apr 15, Thermo Fisher disclosed that it will acquire LIFE for
roughly $13.6 billion plus the assumption of the latter's net
debt ($2.2 billion as of year-end 2012).
The total price of the purchase of $13.6 billion includes cash
and debt of $9.5-$10.0 billion and as much as $4.0 billion in
equity. EC's support in this regard is considered to be a major
positive and a big milestone for the deal to finally go
From the financial perspective, the buyout is expected to be
immediately accretive to Thermo Fisher's adjusted earnings by 90
cents to $1.00 within the first full year of the takeover.
Further, the acquisition is expected to create significant cost
and revenue synergies for the company, with adjusted operating
income synergies of $85 million in the first year.
From Life Technologies' point of view, given its expansive
line of consumables for genomic and molecular and cell biology,
the acquisition by Thermo Fisher will effortlessly strengthen the
combined company's global foothold and commercial reach.
Currently, Thermo Fisher carries a Zacks Rank #3 (Hold). A
better-ranked stock in the same sector is
Geospace Technologies Corp.
), carrying a Zacks Rank #2 (Buy).
GENL ELECTRIC (GE): Free Stock Analysis
GEOSPACE TEC CP (GEOS): Free Stock Analysis
LIFE TECHNOLOGS (LIFE): Free Stock Analysis
THERMO FISHER (TMO): Free Stock Analysis
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