Life sciences in Bay State set to gain a new giant

Thermo Electron Corp., a Waltham scientific and medical instruments company, was set to announce today that it would acquire rival Fisher Scientific International in a deal valued at $10.6 billion, adding a new life sciences giant to the Massachusetts corporate landscape.

Thermo, whose roots date to 1956, would also assume $2.2 billion of debt held by the New Hampshire-based Fisher, people involved in negotiating the merger said late last night.

The combined company, which is expected to be named Thermo Fisher Scientific Inc., would be based in Waltham, people involved in the deal said. It would have 30,000 employees and a stock-market value of around $15.5 billion, based on the companies' combined values on Friday.

A merged Thermo-Fisher would instantly become one of the most important corporations in Massachusetts' burgeoning life sciences sector. State business and political leaders expect the life sciences cluster -- including biotechnology, pharmaceuticals, medical-device companies and suppliers, hospitals and universities, and the public and private research laboratories associated with them -- to prove as important a driver of the state's economic growth in coming decades as technology, computers, and defense contracting have been in the last half-century.

The new company would have a market value about half that of Boston Scientific Corp. of Natick, a maker of medical devices, including artery-opening stents used for heart patients. Boston Scientific last month completed a $27 billion acquisition of Guidant Corp., an Indianapolis maker of implantable defibrillators and pacemakers, beating out industry titan Johnson & Johnson in a bidding war. That acquisition made Boston Scientific the biggest heart-device maker in the world and the top life sciences company based in Massachusetts.

The back-to-back major expansions by local life sciences corporations contrast sharply with deals that have involved the sale of marquee local corporate giants like FleetBoston Financial Corp., Gillette Co., John Hancock Financial Services Inc., and Reebok Ltd. to out-of-state or foreign buyers.

The deals also represent an ongoing shift of Bay State corporate leadership power from downtown Boston to Route 128 and Cambridge, where most of the state's biggest public companies now have their headquarters.

Fisher, which was founded in 1902 and markets more than 600,000 different products and services, had total sales of $5.6 billion last year. Thermo Electron is the smaller company, with revenue last year of $2.6 billion.

To be sure, the deal could hit a snag at the last minute. But if it goes through as expected, Thermo will technically be the acquiring company and its chief executive officer, Marijn E. Dekkers, will become chief executive of the combined company, the people involved in the deal said. Fisher vice chairman Paul M. Meister will become chairman of the board of the combined company, and current Fisher chairman Paul M. Montrone will stay on in a senior advisory capacity.

Two negotiators involved in the deal said it came together quickly in recent weeks after Thermo and Fisher executives agreed they could rapidly increase sales and profits by merger. Thermo projects that the deal, expected to close this autumn, will increase its earnings per share next year by 18 percent over current forecasts, these people said.

Fisher shareholders will get about a 7 percent premium over the value of their current shares in newly issued Thermo Fisher shares, negotiators said.

The companies also expect to reap $150 million a year in savings by combining operations, although how many employees could be laid off has not been determined, negotiators said. The companies also envision $50 million in near-term sales increases, as staffs cross-promote each company's products with existing customers.

Both companies have been acquiring smaller companies in the last year, including Thermo's nearly $1 billion acquisition last year of SPX Corp.'s Kendro Laboratory Products, a maker of centrifuges and other laboratory equipment.

Thermo has reinvented itself repeatedly over a 50-year history that began when a Massachusetts Institute of Technology professor, George Hatsopoulos, founded the company to develop a method of turning heat directly into electricity. That technology never worked out, but Thermo Electron went on to develop markets in a sprawling range of technological products and devices.

During the 1980s, the company became legendary for spinning off nearly two dozen separate public subsidiaries that all had the word ''Thermo" in their title. But beginning in 2000, under Dekkers and his predecessor, Richard Syron, the company went on a simplification tear, selling, folding, or reacquiring subsidiaries under the Thermo Electron brand and making its chief focus laboratory and life sciences tools and devices.

Peter J. Howe can be reached at howe@globe.com.