The "Merger Monday" moniker can be used again today thanks to the news that Thermo Fisher Scientific (TMO 171.52), the world leader in serving science, is going to acquire Patheon (PTHN 26.00), a global provider of pharmaceutical development and manufacturing services, in a $7.2 billion cash deal.
The deal includes approximately $2.0 billion of net debt and translates to an offer of $35.00 per share for PTHN shareholders, which is a 35% premium above Friday's closing price.
Patheon went public last July with a downsized IPO that was priced at $21.00 per share. The stock opened at $25.00 and peaked at $32.95 in late February before collapsing back to $23.72 in the wake of the company's disappointing first quarter earnings report, which featured reduced guidance for fiscal 2017 that Patheon blamed on exchange rates and shifts in the timing of customer volumes and key product approvals.
With the offer from Thermo Fisher Scientific, then, shareholders who have bought and held the stock since the IPO will be made whole and then some.
Thermo Fisher Scientific has committed debt financing from Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC, and it expects to complete the transaction, pending the applicable approvals, by the end of 2017.
There were four, specific advantages of the Patheon purchase that were highlighted by Thermo Fisher Scientific: (1) it provides entry into the attractive, high-growth contract development and manufacturing organization market (2) the combination significantly strengthens Thermo Fisher's unique value proposition for pharmaceutical and biotech customers by adding highly complementary services (3) it creates creates substantial synergies and positions the combined company to further accelerate growth and (4) it delivers attractive financial benefits.
Thermo Fisher Scientific estimates the transaction will be immediately and significantly accretive to its adjusted earnings per share by $0.30 in the first full year after close and that it will realize total synergies of approximately $120 million by year three following the close.
Upon closing, Patheon, which generated approximately $1.9 billion of revenue in 2016, will be part of Thermo Fisher's Laboratory Products and Services Segment, which delivered $7.03 billion, or 38%, of Thermo Fischer Scientific's total revenue in 2016.