A significant change is underway for Wilmington-headquartered contract research organization PPD, but it remains to be seen exactly how it will impact the company’s local presence.

Massachusetts-based Thermo Fisher Scientific's purchase of PPD would not impact the day-to-day work of PPD's employees, which number 26,000 globally and 1,800 in the Wilmington area, the company’s leader Marc Casper said during a Thursday morning conference call about the company’s $17.4 billion purchase of PPD.

He also said they plan to pull in members of PPD’s senior executive team.

The conference call followed an announcement Thursday morning by Thermo Fisher Scientific (NYSE: TMO) about its acquisition of PPD (Nasdaq: PPD), one of the largest employers in Wilmington.

Thermo Fisher Scientific did not respond Thursday afternoon to questions regarding how the sale would impact PPD’s local workforce or its presence in Wilmington. Thermo Fisher investor relations instead referred to company comments from its leader during the call.

Casper, the company’s chairman, president and CEO, didn't specifically talk about PPD's Wilmington site during the call Thursday.

He did, however, say that the company is excited to welcome the PPD team and “all its colleagues.”

“One of the things that's different about this type of transaction, for the colleagues that are delivering the workday in and day out of PPD, their job’s going to be exactly as it is today, post-close. There’s not an integration with job changes,” Casper said.

In the agreement between both companies, Thermo Fisher plans to acquire PPD for $47.50 per share, as well as assume about $3.5 billion of net debt. The transaction is expected to close by the end of this year but is subject to regulatory approvals, officials said.

After the deal closes, PPD would become part of Thermo Fisher’s Laboratory Products and Services Segment.

“This is not the only large transaction that’s going on in this space right now," said Deutsche Bank analyst George Hill during Thursday's WilmingtonBiz Talk. 

Stephen Williamson, Thermo Fisher’s senior vice president and CFO, said during the call Thursday that the company has a long track record of efficiently and effectively integrating businesses, capturing cost synergies at the same time as accelerating the business's top line.

From a financial perspective, Williamson said that the price represents a premium of approximately 24% to the uneffective closing price of PPD’s common stock on the Nasdaq as of April 13.

“The transaction is expected to be immediately, and significantly accretive to adjust the VCs, adding $1.40 in the first 12 months while in close and quickly ramping to over $2 per share,” Williamson said. “We expect to generate significant synergies in this transaction, achieving $125 million of total synergies by year three following the close. 

“To break that down, we expect $75 million in cost synergies and expect about $50 million of adjusted operating income benefit from revenue-related synergy,” he said.

Cost synergies will come from eliminating redundant public company costs and deployment of its PPI (producer price index) business to drive productivity and sourcing benefits, Williamson said.

He said the combination of Thermo Fisher’s resources and capabilities as a supplier to the pharma and biotech industry would increase opportunities for PPD with both new and existing customers.

In addition to revenue synergies, Thermo Fisher has “many more opportunities to generate additional benefits for customers for many years to come,” Williamson said. 

Hill, who follows PPD as well as the health care technology and services sectors, described the synergies outlined by the company as “relatively modest.”

The synergies “represents very modest administrative savings, kind of very modest public company cost savings, they're not huge synergy targets,” Hill said.

For the Wilmington area and its workforce, Hill said, that means “all of the academic type work and all of the research type work is probably very safe. Anything that would be considered customer-facing from a jobs perspective is probably very safe. There's probably some administrative and some executive redundancies that are typically eliminated as part of business consolidations like this. I would suspect that the risk to jobs from a numbers perspective I would expect is probably very modest … I wouldn't expect it to be a big number.”

Casper said Thursday during the call that PPD Chairman and CEO David Simmons also plans to help with the transition, adding, “We're going to work through all of the details of the rest of that.”

Simmons joined PPD as chairman and CEO in 2012 and helped oversee the company’s return to the publicly traded market on Nasdaq early last year.

“This is a high-performing team that's done a really nice job of building a business. And we're going to have quite a number of executives from PPD join Thermo Fisher Scientific, and we're super excited about that,” Casper said. “If you look at our history, our senior executive team has come from the businesses we acquired … all of the different major components of the company, that’s where the senior executives are coming from.”

Simmons described Thermo Fisher as a company with a similar culture and values as PPD that will “provide a great foundation for our colleagues to continue to deliver for our customers and to develop their own skills and careers.”

“This is a very exciting announcement for our shareholders and will provide customers with an even better opportunity to bring meaningful innovation to the market faster and more efficiently,” Simmons said in the release.

Thermo Fisher has a global workforce of more than 80,000 and annual revenue exceeding $30 billion, according to the company. It works on technologies, purchasing and pharmaceutical services through its brands that include Applied Biosystems, Unity Lab Services and Patheon.

PPD provides a range of clinical research and laboratory services for its customers.

“A leader in the growing $50 billion clinical research services industry, PPD has more than 26,000 colleagues operating in nearly 50 countries. In 2020, the company generated revenue of $4.7 billion,” the release stated.

Near-term benefits of the acquisition, according to the release, include Thermo Fisher’s access to key decision-makers in pharma and biotech companies, which will “increase the opportunities for PPD to win additional work from existing and new customers as the pandemic has further highlighted the need for these customers to develop strategic relationships with their key suppliers.”

“The combined company’s extensive capabilities and knowledge in serving the pharma and biotech industry will enable new solutions for customers that create the potential to reduce the time and cost of the drug development process,” the release stated.

For Thermo Fisher, the deal positions it as a global leader in the clinical research services industry, a $50 billion industry forecasted to grow long term.

Thermo Fisher Scientific’s head pointed to the sector’s growth as a reason behind the interest in PPD.

“Pharma and Biotech is our largest and fastest-growing end market, and our customers value us as a strategic partner and an industry leader. The acquisition of PPD is a natural extension for Thermo Fisher and will enable us to provide these customers with important clinical research services and partner with them in new and exciting ways as they move a scientific idea to an approved medicine quickly, reliably and cost effectively,” Casper said in the release. “Longer term, we plan to continue to invest in and connect the capabilities across the combined company to further help our customers accelerate innovation and drive productivity, while driving further value for our shareholders.”