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Thermo Fisher To Buy CDMO Firm Patheon In $7.2 Bln Deal

ThermoFisherScientific-Patheon-051517-lt.jpg

Thermo Fisher Scientific Inc. (TMO), a supplier to the biopharmaceutical industry, announced Monday that it has agreed to buy Patheon N.V. (PTHN), a Contract Development and Manufacturing Organization or CDMO.

Thermo Fisher will commence a tender offer to acquire Patheon for $35 per share in cash. The transaction represents a purchase price of approximately $7.2 billion, which includes the assumption of approximately $2.0 billion of net debt.

In pre-market activity on the NYSE, Patheon shares were gaining 33.58 percent at $34.73.

The transaction is expected to be immediately and significantly accretive to Thermo Fisher's adjusted earnings per share by $0.30 in the first full year after close. Thermo Fisher expects to realize total synergies of approximately $120 million by year three following the close.

The deal is expected to be completed by the end of 2017, subject to the satisfaction of customary closing conditions.

Thermo Fisher said it has entered into tender and support agreements with affiliates of JLL Partners and Royal DSM, whose collective holdings represent approximately 73% of Patheon shares, under which they will tender their shares in the deal.

Patheon is a provider of high-quality drug development and delivery solutions to the pharmaceutical and biopharma sectors. Patheon, with approximately 9,000 professionals, has an extensive network of state-of-the-art facilities primarily in North America and Europe. The company generated 2016 revenue of approximately $1.9 billion.

Following the acquisition, Patheon will become part of Thermo Fisher's Laboratory Products and Services Segment.

James Mullen, chief executive officer of Patheon, said, "Over the past several years, we have increased our capabilities to become a leading CDMO provider in a highly fragmented market. We are confident that our combined offerings and Thermo Fisher's proven track record of disciplined M&A and successful integrations will take our business to the next level."

For the deal, Thermo Fisher has obtained committed debt financing from Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC. The company expects to finance the purchase price with debt of approximately $5.2 billion and equity of approximately $2 billion. The offer is not subject to any financing condition.

In the transaction, Goldman Sachs & Co. LLC is acting as financial advisor to Thermo Fisher, and Morgan Stanley & Co. LLC is acting as financial advisor to Patheon.

by RTT Staff Writer

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