Thermo Fisher Nears Deal to Buy PPD for More Than $15 Billion -- Update
By Jonathan D. Rockoff and Cara Lombardo
Thermo Fisher Scientific Inc. is nearing a deal to buy
pharmaceutical-testing company PPD Inc. for more than $15 billion,
according to people familiar with the matter, in what would be the
latest tie-up among companies that run clinical trials and provide
other services for drugmakers.
The companies could finalize a deal as soon as this week,
assuming the talks don't fall apart, the people said. PPD has a
market value of about $13.6 billion, while Thermo Fisher's is $187
PPD, based in Wilmington, N.C., is a so-called contract-research
organization, a type of company that runs the studies testing
experimental drugs developed by pharmaceutical companies. PPD also
provides laboratory services.
The contract-research industry has expanded in recent years as
drugmakers pour money into developing new cancer and other
treatments. While CROs, as the firms are known, were hurt as
pharmaceutical trials were disrupted in the early days of the
pandemic, activity has been returning, augmented by drugmaker- and
government-funded studies testing Covid-19 drugs and vaccines. The
industry is poised to benefit further from a heightened interest in
treatments and preventive measures for any future pandemics.
PPD reported $4.7 billion in revenue last year, up 16%. Its net
income tripled to just over $160 million.
Thermo, of Waltham, Mass., sells lab equipment, chemicals and
tests, among other life-sciences services and products. It had $32
billion in sales last year, a 26% increase. The shares have risen
sharply over the past several years and are up nearly 50% in the
past 12 months alone.
Through its Patheon business, acquired in 2017, Thermo already
provides services including clinical-trial logistics, and buying
PPD would augment that.
Thermo has been on the hunt for acquisitions. It agreed to buy
molecular-diagnostics company Qiagen NV for about $10.1 billion in
March 2020. It subsequently sweetened the bid but in August
terminated the agreement after failing to get shareholder approval.
Thermo now has more than $10 billion in cash.
The agreement would be the second major tie-up in the CRO
industry this year and would come as a handful of others also
In February, Icon PLC said it would buy rival PRA Health
Sciences Inc. for $12 billion. Laboratory Corp. of America Holdings
said in March it hired bankers to review the company's structure;
analysts expect it could explore a separation of its
drug-development unit Covance.
Two private-equity firms are significant owners of PPD: Hellman
& Friedman LLC owns 38% of the company, while Carlyle Group
Inc. holds 16%, according to FactSet. The two firms agreed to take
the company private in 2011 before it returned to the public
markets in a February 2020 IPO.
The shares plummeted in the early days of the pandemic along
with much of the market, but have since recovered and were trading
at around $39 apiece Wednesday afternoon, up from around $30 a
share at their debut. The stock soared more than 13% after The Wall
Street Journal subsequently reported on the potential deal.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and
Cara Lombardo at firstname.lastname@example.org
(END) Dow Jones Newswires
April 14, 2021 16:14 ET (20:14 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.