Thermo Fisher Scientific will buy Wilmington-based PPD for $17.4 billion, the companies announced this morning.
Under the agreement, approved by both companies’ boards, Thermo Fisher will acquire PPD for $47.50 per share for the total cash prices as well as assume about $3.5 billion of net debt, according to a news release.
The transaction is expected to be completed 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.
Massachusetts-based Thermo Fisher Scientific (NYSE: TMO) 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.
A contract research organization that has grown over the past decades in Wilmington, PPD (Nasdaq: 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.
Of that employee base, about 1,800 work in the Wilmington area.
The release did not address PPD’s local headquarters and if any changes would take place to the company’s Wilmington presence.
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.
“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,” the release stated. “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.”
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,” Marc N. Casper, chairman, president and CEO Thermo Fisher Scientific, said in a statement. “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.”
PPD Chairman and CEO David 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 will host a conference call and webcast at 8:30 a.m. this morning to provide more information on this announcement. The webcast and accompanying slides can be viewed from the Investors section of thermofisher.com
Check back later for more details.