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Thermo Fisher Scientific Inc. (TMO): Is It Getting a Good Deal With Life Technologies Corp. (LIFE)?

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Thermo Fisher Scientific Inc. (NYSE:TMO) announced today that it will acquire genomics company Life Technologies Corp. (NASDAQ:LIFE) in a $13.6 billion deal. The agreement calls for Thermo Fisher Scientific Inc. (NYSE:TMO) to pay $76 per diluted share, as well as assume around $2.2 billion in Life Technologies’ debt.

Thermo Fisher Scientific Inc. (NYSE:TMO)

Leading up to the sale
Life Technologies Corp. (NASDAQ:LIFE) attracted the interest of several parties when it first announced plans to look for a buyer in January. At that time, reports indicated that at least four private equity firms were approached.

Considerable speculation also centered around the possibility that Roche (OTCBB:RHHBY) could entertain an offer. Roche had previously pursued an acquisition of Life’s rival Illumina, Inc. (NASDAQ:ILMN). However, the potential deal broke down because Illumina wanted a price higher than what Roche was willing to pay. Roche’s chairman made comments then that strongly hinted the company could go after another target. Life Technologies Corp. (NASDAQ:LIFE) seemed to be a strong possibility.

Ultimately, Roche didn’t end up in the final hunt while others did. Sigma-Aldrich Corporation (NASDAQ:SIAL), a maker of chemicals for labs and other life sciences organizations, was one of two parties looking to buy Life Technologies. The other was a private consortium made up of Blackstone Group, Carlisle GroupKKR & Co. L.P. (NYSE:KKR), and Temesek Holdings.

Reuters reported that the private consortium’s highest bid came in at $67 per share, well below that of Thermo Fisher Scientific Inc. (NYSE:TMO). No details were available on amounts offered by Sigma-Aldrich.

In the end, Life Systems’ board of directors went with the higher bid from Thermo Fisher Scientific Inc. (NYSE:TMO). The price represents a 12% premium over the stock’s closing price last week.

Good deal?
There’s really no question about whether this is a good deal for Life Technologies. It definitely is.

Life’s stock traded at less than $55 per share the day before the company announced its plans to find a buyer. And those levels were the highest in well over a year. With the acquisition, shareholders benefit from a 38% increase compared to mid-January.

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