Thermo Fisher to acquire PPD for over $17 billion

Thermo Fisher Scientific company office in Silicon Valley, US [Credit: Michael Vi/Shutterstock.com].

Thermo Fisher Scientific has announced that it will acquire PPD Inc. for $47.50 per share for a total cash purchase price of $17.4 billion. In addition, Thermo Fisher will assume approximately $3.5 billion of net debt, which represents a premium of approximately 24 percent to the unaffected closing price of PPD’s common stock on the Nasdaq as of Tuesday 13 April 2021. The boards of directors have both approved the definitive agreement.

PPD is a leading clinical research organisation (CRO) providing a broad range of clinical research and laboratory services to the pharma and biotech industry. The company has more than 26,000 colleagues operating in nearly 50 countries and generated $4.7 billion in revenue in 2020. Through the acquisition, PPD will become part of Thermo Fisher’s Laboratory Products and Services Segment.

“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,” said Marc Casper, chairman, president and chief executive officer, Thermo Fisher Scientific. “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.”

Some of the benefits of the transaction, according to Thermo Fisher, include:

• It establishes Thermo Fisher as one of the global leaders in the clinical research services industry which is valued at $50 billion and forecasted to continue to grow long-term
• It enhances the company’s value proposition by adding highly complimentary services such as a proven drug development platform, patient recruitment capabilities, strong laboratory services and a complementary reputation for excellent quality and service
• The combined companies’ capabilities and knowledge will enable new solutions for customers that create the potential to reduce the time and cost of the drug development process
• That 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. Thermo Fisher expects to realise total synergies of approximately $125 million by year three following close.

Approvals and financing

The transaction, which is expected to be completed by the end of 2021, is subject to the satisfaction of customary closing conditions, including the receipt of applicable regulatory approvals.

In addition to board approval, shareholders holding in aggregate approximately 60 percent of the issued and outstanding shares of common stock of PPD have approved the transaction by written consent. No further action by other PPD shareholders is required to approve the transaction.

Thermo Fisher has obtained committed bridge financing with respect to a portion of the purchase price. To fund the transaction, Thermo Fisher intends to use proceeds from debt financing and cash on hand.