Thermo Fisher Scientific to Enter Electron Microscopy Market with FEI Purchase

Based on first quarter revenues, FEI will represent 4% of Analytical Instrument division sales. In a conference call, Thermo Fisher Scientific stated that it will be able to leverage its presence in the pharmaceutical industry and industrial labs to further expand FEI’s business. In the first quarter, FEI’s Industry Group, which largely serves the semiconductor market, accounted for 53% of sales. The Science Group, which primarily serves academic labs, accounted for the remainder. On the call, Thermo Fisher Scientific also noted the currency and cost advantages of FEI’s Czech manufacturing facility. Thermo Fisher Scientific expects organic sales growth for FEI over the next several years to be 5%–7%. According to Strategic Directions International estimates, FEI is the largest electron microscope company.

Waltham, MA and Hillsboro, OR 5/27/16—Thermo Fisher Scientific has made an offer to acquire publicly held FEI for $107.50 per share, or $4.2 billion (excluding $400 million of FEI cash) in cash and debt. This is a 13.7% premium over the closing price on May 26. A designer and manufacturer of high-performance electron microscopes, FEI recorded revenues of $930 million in 2015. “In life sciences, there is growing adoption of electron microscopy to study the structure of proteins. The technologies we gain with FEI will complement our mass spectrometry leadership, putting Thermo Fisher in the best position to capitalize on this important trend,” stated Thermo Fisher Scientific President and CEO Marc N. Casper. “As the unrivaled leader in life sciences, we will also be able to leverage our global scale and commercial reach to extend the use of FEI’s products within our large biopharma customer base.” The company also cited benefits from an expanded presence in the materials science market, FEI’s high-margin services business, and revenue and cost synergies. By the first full year following completion, the transaction is expected to be accretive to Thermo Fisher Scientific’s EPS by $0.30. Synergies are anticipated to total $80 million by year three, including $55 million in cost synergies. FEI will join Thermo Fisher Scientific’s Analytical Instrument division. The deal is expected to close in early 2017.

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