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May 8, 2006 3:32 am
Fisher Scientific, the US scientific laboratory equipment company, on Sunday night was close to agreeing to a merger with Thermo Electron, a smaller industrial group focused on making scientific instruments. The two companies were considering an all-stock deal worth about $9.8bn, excluding debt, people close to the matter said.
The proposed transaction, which was expected to be approved by directors at both companies, should create a new company – Thermo Fisher Scientific — with about $9bn in annual revenues and a worldwide sales force of 7,500.
Its ambition will be to establish itself as a one-stop shop for laboratory equipment combining Fisher’s strength in consumables with Thermo’s devices, including its mass spectrometre, which measures the mass and concentration of atoms and molecules.
Although Fisher is a larger company, Thermo is the acquirer in the deal. Marijn Dekkers, Thermo’s chief executive, will lead the combined group while Paul Montrone, chief executive of Fisher, will be stepping aside. Peter Meister, Fisher’s vice-chairman, will become chairman of the new company, which will be headquartered in Thermo’s hometown in Massachusetts.
In the “reverse takeover”, Fisher shareholders will receive two shares in the combined group for each Fisher share. This values Fisher at $78.90 per share, a small premium to its market value of $9.2bn. Shareholders of Fisher, which is based in New Hampshire, will end up owning 61 per cent of the combined group, with Thermo investors owning the remaining 39 per cent.
Among the challenges facing Fisher and Thermo as they unveil the deal will be to persuade Wall Street investors that the unusual structure of the transaction is justified. In addition, they will have to provide detail on their intention to produce about $200m in annual cost-savings from the merger.
One person close to the talks on Sunday night said the savings would come from better purchasing agreements, the cross-selling of products, and the integration of manufacturing facilities.
Bankers at Lehman Brothers and Rothschild, as well as lawyers at Wachtell Lipton advised Thermo. Bankers at Lazard and Goldman Sachs worked with Fisher, alongside lawyers at Skadden Arps.
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