Will Thermo Fisher Buy LIFE? - Analyst Blog
April 10 2013 - 1:00PM
Zacks
Following a rumor that Life Technologies (LIFE)
would be acquired by its peer Thermo Fisher Scientific
Inc. (TMO) or by a consortium of a number of private
equity firms for approximately $12 billion, the shares of Life
Technologies reached its 52-week high of $67.85 on Tuesday.
According to several media sources, Thermo Fisher, which was
working on a bid to buy Life Technologies over the past months,
offered a bid price of more than $65 a share. Although the
credibility of this deal remains uncertain, its materialization
will turn out as the biggest ever deal for Thermo Fisher since its
inception in 2006 through a $12.8 billion merger between Thermo
Electron and Fisher Scientific International.
Reuters stated that, as per several people familiar with the
matter, a consortium of some private equity firms was formed to
takeover Life Technologies with a bid close to $65 per share.
Immediately after that, yesterday, Thermo Fisher made a binding
offer.
Thermo Fisher met the bid deadline but the private equity firms
who were working on the joint bid, missed it. These firms are
currently working on it in order to secure the equity needed to
take Life Technologies private. The source also stated that, over
the recent past, Thermo Fisher had been considering to bid for a
potential takeover of Life Technologies in the range of $65−$70 per
share.
Our Take
Thermo Fisher has undertaken several acquisitions in the past
that have added complimentary technologies, expanded presence in
high-growth markets, generated both cost and revenue synergies
thereby creating shareholder value. The proposed acquisition of
Life Technologies in this regard, if completed, will create a solid
position for Thermo Fisher in the field of genetic research and
analysis.
However, considering Life Technologies’ current market cap,
which lags a mere $1 billion from the bidding price, we are
doubtful about the materialization of the deal. Based on the past
record and observing once again the steady fundamentals of Life
Technologies along with its huge opportunities in the growing
gene-sequencing market, we remain skeptical about the credibility
of the acquisition news. We prefer to remain on the sidelines until
more visibility is obtained in this regard.
Currently, both Thermo Fisher and Life Technologies carry a
Zacks Rank #3 (Hold). However, other stocks in the medical device
sector, carrying a Zacks Rank #1 (Strong Buy), such as
Given Imaging (GIVN) and Cyberonics
Inc. (CYBX) appear impressive.
CYBERONICS INC (CYBX): Free Stock Analysis Report
GIVEN IMAGING (GIVN): Free Stock Analysis Report
LIFE TECHNOLOGS (LIFE): Free Stock Analysis Report
THERMO FISHER (TMO): Free Stock Analysis Report
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