Thermo Fisher Scientific Inc. (TMO) and clinical research organization PPD, Inc. (PPD) announced Thursday that their boards of directors have approved a definitive agreement under which Thermo Fisher will acquire PPD for $47.50 per share for a total cash purchase price of $17.4 billion, plus the assumption of about $3.5 billion of net debt.
The per share consideration represents a premium of approximately 24 percent to the unaffected closing price of PPD’s common stock on the Nasdaq as of Tuesday, April 13, 2021.
PPD provides a broad range of clinical research and laboratory services to enable customers to accelerate innovation and increase drug development productivity. It generated revenues of $4.7 billion in 2020 with operations in nearly 50 countries.
The acquisition will further expand Thermo Fisher’s service offering to pharma and biotech customers, adding highly complementary services for its fastest growing end market. It also establishes Thermo Fisher as a global leader in the attractive and high growth clinical research services industry.
The transaction is expected to be immediately and significantly accretive to Thermo Fisher’s adjusted EPS, adding $1.40 in the first 12 months after close.
Thermo Fisher expects to realize total synergies of approximately $125 million by year three following close, consisting of approximately $75 million of cost synergies and approximately $50 million of adjusted operating income benefit from revenue-related synergies.
The transaction, expected to close by the end of 2021, is subject to the satisfaction of customary closing conditions, including the receipt of applicable regulatory approvals. Upon close of the transaction, PPD will become part of Thermo Fisher’s Laboratory Products and Services Segment.
In addition to board approval, shareholders holding in aggregate approximately 60 percent of the issued and outstanding shares of common stock of PPD have approved the transaction by written consent. No further action by other PPD shareholders is required to approve the transaction.
Thermo Fisher has obtained committed bridge financing with respect to a portion of the purchase price. To fund the transaction, Thermo Fisher intends to use proceeds from debt financing and cash on hand.
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