|Trends & Perspectives|
In a move consistent with its busy acquisition history in 2010, Thermo Fisher Scientific (TFS) announced at the end of last year its plans to acquire chromatography-system manufacturer Dionex Corp. (Sunnyvale, CA). TFS has also recently completed its sale of Athena Diagnostics and Lancaster Laboratories, two laboratory-testing-services businesses.
Proposed Dionex Purchase. As of April 4 of this year, TFS had extended its cash tender offer to 7:00 p.m. EST on May 13. The proposed acquisition comes as the most recent in a string of acquisitions, mostly of companies integrated into Thermo Fisher’s Analytical Technologies segment. Dionex will be brought into the same group; however, unlike the other other three 2010 additions to that division, Dionex’s pricetag is much steeper: approximately $2.1 billion. The other acquisitions, Ahura Scientific, Proxeon, and Fermentas, sold for much less than $100 million apiece.
Thermo Fisher Scientific will acquire all of Dionex’s outstanding shares for $118.50 per share in cash-with the total purchase price equaling about $2.1 billion. The offer represents a 21% premium to Dionex’s closing stock price on the last day of trading prior to the announcement and a 32% premium to Dionex’s average closing stock price over the 60 days prior. The deal is expected to be completed sometime this year.
TSF’s stated goals for the acquisition include the following:
• Create a leading chromatography offering by adding Dionex’s ion and liquid chromatography portfolio to Thermo Fisher’s existing chromatography capabilities
• Improve performance and productivity for customers by combining Thermo Fisher’s leadership in mass spectrometry with Dionex’s laboratory information-management systems
• Strengthen software growth platform by combining Dionex’s chromatography data system with TSF’s laboratory information-management systems
• Increase TFS’s footprint in China and other Asia-Pacific markets
In a press statement released by TSF, Marc N. Casper, president and CEO of Thermo Fisher, points to Dionex’s “strong presence in China,” where TSF has established headquarters for its global environmental instruments business and “continues to build” its commercial infrastructure “to meet the needs of customers in growing water quality, consumer safety, and/ life-sciences markets.”
Thermo Fisher expects to realize total operating synergies of $60 million in year three following the transaction’s close through a combination of cost savings and “revenue enhancements.” It expects to see $15 million in total operating synergies in the first year.
Dionex introduced the first ion chromatography system for water analysis soon after its founding in 1975 and has grown consistently through innovation and global expansion. The company currently has more than 1600 employees in 21 countries spanning six continents-including a significant presence in the Asia-Pacific region.
Sale of Athena and Lancaster. TFS appears to be moving away from contract laboratory services. In early April of this year, it completed its sale of Athena Diagnostics and Lancaster Laboratories businesses to Quest Diagnostics Inc. and Eurofins Scientific SE, respectively. The proceeds from both sales total $940 million. Quest bought Worcester, MA–based Athena Diagnostics for $740 million. Athena is a reference lab that provides comprehensive diagnostic testing for neurological and other diseases. The business had around $110 million in revenues for full year 2010 and was part of Thermo Fisher’s Specialty Diagnostics business within its Analytical Technologies segment.
Eurofins Scientific SE bought Lancaster Laboratories for $200 million, subject to a post-closing adjustment. The business, based in Lancaster, PA, provides contract-testing services for pharmaceutical, biopharmaceutical, and environmental sciences customers. It had around $115 million in revenues for 2010 and was part of Thermo Fisher’s biopharma services business within its Laboratory Products and Services segment.
TSF brings in more than $10 billion in annual revenues and employs more than 35,000 persons in 40 countries. It ranks 234th in the Fortune 500.