Thermo Fisher Scientific (NYSE:TMO), a provider of laboratory equipment, said today that it will buy Dionex, a manufacturer of chemical separation systems, for $2.1 billion, or $118.50 per share in cash.
The purchase price represents a 21% premium to Dionex's closing stock price on Friday.
The deal will add Dionex’s ion and liquid separation offerings to Thermo Fisher’s gas separation offerings. The deal also gives Thermo Fisher better access to the Asia-Pacific region and emerging markets since Dionex currently generates more than 35% of its revenues there.
Also, the combined company will be able to offer water analysis products, where growth is driven by new regulatory requirements and increased testing in developing countries such as China.
As a result of the deal, Thermo Fisher expects to realize operating synergies of $60 million in the third year after the transaction’s close.
The transaction is expected to be immediately accretive to Thermo Fisher's adjusted earnings per share by 13 cents to 15 cents in the first year following the close.
Thermo Fisher said it intends to use cash on hand and proceeds from committed financing from Barclays Capital and J.P. Morgan Securities to pay for the deal. As of October 2, Thermo Fisher had about $930 million in cash.
Dionex will be integrated into Thermo Fisher's Analytical Technologies Segment after closing of the deal.
The transaction, approved by both companies’ boards, is subject to customary closing conditions and is expected to be completed in the first quarter of 2011.
Dionex’s share price has rallied almost 20% on the pre-market to trade at $117.75 as of 9:18 am. Meanwhile, Thermo Fisher’s shares have rallied 3.6% to trade at $54.95.