Thermo Fisher Scientific to buy Life Technologies Corp. in $13.6b deal
Thermo Fisher Scientific Inc. agreed Monday to buy diagnostics equipment maker Life Technologies Corp., in a $13.6 billion deal that will significantly expand Waltham-based Thermo Fisher and establish it as a major force in the emerging personalized medicine market.
The definitive agreement caps a string of acquisitions over the past five years for Thermo Fisher, a leader in supplying medical instruments and technology to laboratories around the world.
It is one of the biggest US buyouts unveiled so far in 2013 and the largest ever for Thermo Fisher, exceeding even the the $10.6 billion deal that formed the company in 2006 through the merger of Thermo Electron Corp. and Fisher Scientific International Inc.
“Obviously, this will be a very big entity,” Russ Muken, biotechnology analyst for research firm ISI Group, said in a conference call. “It’s a pretty compelling financial transaction.”
Under the financial terms of the deal, Thermo Fisher would pay $76 a share for Life Technologies and assume its debt, which stood at $2.2 billion at the end of last year.
In a press release, the companies said the deal, which requires regulatory approval from US and foreign governments, is expected to close early next year.
Shares of Thermo Fisher climbed 2.9 percent to $81.89 in late morning trading on the New York Stock Exchange.
Life Technologies, based in Carlsbad, Calif., has been a top player in DNA-sequencing tests, a key technology in the emerging field of genetic-based medicine.
In January, it struck a partnership with Boston Children’s Hospital, the nation’s largest pediatric research medical center, to jointly form a company to develop tests for pediatric diseases and interpret results. That company, Claritas-Genomics, will be based in Waltham, where Harvard-affiliated Boston Children’s Hospital opened a genetics diagnostic lab two years ago.
Thermo Fisher chief executive Marc N. Casper said in an interview that the Life Technologies transaction will strengthen his company financially but is not expected to create many jobs in Massachusetts in the short term.
Thermo Fisher currently has about 39,000 employees worldwide, including nearly 1,500 in Massachusetts.
“The company continues to get stronger, and that’s obviously a benefit for Massachusetts,” Casper said. “In temrs of employment, things will be stable.”
Casper, who took over the top job at Thermo Fisher in 2009, has been purchasing smaller laboratory gear and diagnostics companies, boosting the company’s research spending, and expandng aggressively into emerging markets.
Under his direction, the Waltham lab equipment giant has acquired companies in niche fields ranging from allergy diagnostics to chromatography equipment used for drug manufacturing and testing for drinking water contaminants.
But the purchase of Life Technologies dwarfs any of those transactions, positioning Thermo Fisher at the forefront of a field that is expected to grow rapidly in coming years. If it completes the purchase of Life Technologies, its global workforce would grow to about 50,000. The combined company would generate annual revenues estimated at $16 billion a years.
Thermo Fisher reportedly outbid a consortium of private equity firms led by Blackstone Group LP for Life Technologies.
Casper said the deal would create “significant value for our shareholders” by helping to cement its technology leadership and its global reach. He estimated that revenues from Life Technologies businesses would grow about 3 percent a year, but said that projection is conservative. Thermo Fisher’s own businesses historically have grown at a rate of 4 to 6 percent a year.
Life Technologies hired a pair of investment banks early this year to seek a buyer.
“The combination of Life Technologies and Thermo Fisher Scientific is a tremendous opportunity and the best step forward for our shareholders,” Life Technologies chief executive Gregory T. Lucier told investors Monday.
While Lucier is expected to leave the company when the purchase takes effect, the parties said that Mark P. Stevenson, the California company’s president and chief operating officer will take “a significant leadership role” in the combined company. The parties are also estabishing a retention program that will enable them to keep talented Life Technologies scientists.