UBS commented Tuesday on Thermo Fisher Scientific Inc. (NYSE: TMO) potentially buying Pall Corporation (NYSE: PLL) following news Pall was seeking bids.

Analyst Jonathan Groberg thought the combination could “create a bio-production powerhouse.”

“Our initial analysis suggests that a deal would create a ~$1.5bn bio-production powerhouse, would be EPS accretive, but would be dilutive to ROIC,” Groberg wrote, while bears would likely point to a year 5 ROIC of approximately 7 percent.

Groberg thought that investors would “be understanding of the current valuation regime” and support the transaction as an “appealing strategic fit.”

The analyst estimated that the acquisition of Pall could be approximately 8 percent accretive in its first year with a deal that would not likely close until 2016.

Groberg felt that Thermo Fisher could enhance its roughly $600 million in annual bioproduction sales by acquiring Pall’s $1 billion biopharma business and assumed cost synergies of approximately 13 percent of total Pall costs.

UBS maintained a Buy rating and $160 price target on Thermo Fisher based on its “unparalleled scale and a staples-like top-line,” with management consistently delivering double-digit EPS growth,” and a valuation that suggested future value-creation that had “barely” been priced in to the stock.

The price target was based on the stock trading at 19x the estimated 2016 EPS, “slightly below the current peer group NTM PE multiple of 21x but above TMO's 5-year historical average,” according to Groberg.

Thermo Fisher Scientific Inc. recently traded at $129.23, down 0.49 percent.

Pall Corporation recently traded at $118.10, up 18.92 percent.