WALTHAM, Mass. – Thermo Electron Corp. (TMO) is paying about $10.6 billion in stock for the larger Fisher Scientific International Inc. (FSH) in a deal that would create a powerhouse in making scientific supplies and equipment for the life, laboratory and health sciences industries.
The combined company, which will be named Thermo Fisher Scientific Inc., is expected to have more than $9 billion in revenue and 30,000 employees, the companies announced Monday.
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 Fisher, will become chairman of the board. Thermo will nominate five of the eight members of the new board with three nominated by Fisher.
The combined company will be headquartered in Waltham, Mass., where Thermo is based. It will also maintain an office in Hampton, N.H., where Fisher is based.
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.
The price represents a 7 percent premium over Fisher's closing price of $73.73 on Friday.
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.
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 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.
The transaction is expected to close in the fourth quarter.