Thermo Electron Corp. and Fisher Scientific International Inc. said Monday they would combine in a stock-for-stock transaction worth $10.6 billion, creating the leading provider of laboratory products and services in the life, laboratory and health sciences industry.
The combined company, which will be named Thermo Fisher Scientific Inc., is expected to have more than $9 billion in revenue and $1 billion in cash flow next year.
Under terms of the deal, Fisher shareholders will receive 2 shares of Thermo common stock for each share of Fisher common stock they own. Based on Thermo's closing price of $39.45 per share on Friday, this represents a value of $78.90 per Fisher share, or $10.6 billion, not including debt of $2.2 billion. Upon completion of the transaction, Thermo's shareholders would own about 39 percent of the combined company, and Fisher shareholders would own roughly 61 percent. The transaction will be treated as a reverse merger with Thermo as the acquirer.
The combined company will have 30,000 employees.
Marijn E. Dekkers, president and chief executive of Thermo, will become president and CEO of the combined company, and Paul M. Meister, vice chairman of the board for Fisher, will become chairman of the board. Following the close of the transaction, Paul M. Montrone, chairman and CEO of Fisher, will step down to concentrate on launching new business opportunities. He will remain an adviser to the company. Jim P. Manzi, chairman of the board of Thermo, will serve on the board of the new company. Thermo Fisher Scientific's board will be comprised of eight members, with five nominated by Thermo and three nominated by Fisher.
Thermo expects adjusted earnings per share of the combined company to be in the range of $2.27 to $2.37 next year, reflecting accretion of about 18 percent to Thermo's consensus 2007 adjusted earnings per share. The deal accelerates revenue growth and is expected to result in a 20 percent compound annual growth rate in adjusted earnings per share over three years.
Thermo Fisher Scientific will be headquartered in Waltham, Mass., and will continue to have an office in Hampton, N.H.
The transaction is expected to close in the fourth quarter.