Thermo Fisher Extends Dionex Offer - Analyst Blog

Thermo Fisher Scientific (TMO) has extended the tender offer to acquire shares of Dionex Corporation (DNEX) till February 16, 2011. However, the other conditions remain unchanged. Last week, the company received antitrust clearance with respect to the acquisition. Thermo Fisher is in the process of receiving other clearances and expects to complete the acquisition in the first quarter of fiscal 2011.

Earlier, in December 2010, Thermo Fisher decided to acquire California based Dionex, a leading manufacturer and marketer of chromatography systems for $118.50 per share or a total consideration of $2.1 billion. This acquisition promises $60 million of operating synergies in three years after the close of the transaction and would be accretive to the company's bottom line by 13-15 cents within the first year of closing.

The acquisition of Dionex not only strengthens Thermo Fisher's Analytical Technologies (AT) segment, but will also boost its presence in the Asia-Pacific region. During the third quarter of 2010, AT recorded $1,163.0 million in revenues, up 14.2% (organic growth of 8%) compared to the third quarter of 2009 driven by strong sales of mass spectrometry, clinical diagnostics and biosciences businesses.

The company also witnessed its sales of instruments swell, which cater to industrial customers, implying an improvement in these markets. However, growth in microbiology business got affected by the difficult year-over-year comparison with high H1N1 flu sales in the prior year.

Thermo Fisher exited the third quarter of 2010 with $930.2 million in cash and cash equivalents, 40.5% down from $1.56 billion at the end of December 2009 due to the acquisition of Fermentas and share buyback program. A strong cash balance augurs well for suitable acquisitions and it has been noted that the acquisitions made over the past 12 months have been doing well. Consequently, acquisitions are considered to be significant contributors going forward.

We are currently Neutral on the stock.

 
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