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Thermo Fisher Scientific buys drug ingredients maker Patheon for US$7.2bn

Thermo Fisher Scientific's acquisition of Patheon represents a 35% premium to the share price at Friday's close

Drugs
Thermo has made US$22bn worth of acquisitions over the past five years

US biotechnology company Thermo Fisher Scientific Inc. (NYSE:TMO) has agreed to buy Patheon NV, the Dutch maker of drug ingredients, for US$7.2bn.

Thermo Fisher, which supplies the biopharmaceutical industry with research, clinical trial and production services, will acquire all outstanding Patheon shares for US$35 each in cash, including US$2bn net debt. The deal marks a premium of 35% on the share price at Friday’s close. 

Patheon, a contract development and manufacturing organisation (CDMO), started trading last July and was formed in 2014 through a merger of  Canadian drugmaker Patheon Inc. and the pharmaceutical business of Dutch vitamin maker Royal DSM NV.  The group generated about US$1.9 billion in revenue last year.

"Over the past several years, we have increased our capabilities to become a leading CDMO provider in a highly fragmented market," Patheon chief executive James Mullen said in a statement.

"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."

Thermo will benefit from Patheon's drug manufacturing abilities, allowing it to deliver medicines to the market quicker and at lower costs.

The transaction is expected to be completed by the end of 2017.

The company, which was founded in 2006 after a merger by Thermo Electron and Fisher Scientific, has become the world’s largest manufacturers of diagnostic and testing equipment through acquisitions.

Thermo has made US$22bn in acquisitions over the past five years in addition to Patheon. Last year it bought electron microscope maker FEI Co. for more than US$4bn to expand its suite of testing and technology services.

Quick facts: Thermo Fisher Scientific

Price: 320.5 USD

NYSE:TMO
Market: NYSE
Market Cap: $128.52 billion
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