Print
Email
Print Edition Stories
MHT's Julie Donnelly: Biotechs lag in social media use
MHT's Jackie Noblett: Maine becoming a hub for pet-oriented biotechs
MHT's Julie Donnelly: Life science startups finding investments
At a time when many life sciences companies are just nosing out of their shells following the worst recession in recent memory, Thermo Fisher Scientific Inc. is forging ahead with a growing number of acquisitions as it winds up a companywide restructuring.
Since January, the Waltham-based scientific tools and services company has made four acquisitions designed to extend the company’s depth and breadth. The most recent acquisition — a $260 million cash deal for Canada-based molecular biology tools company Fermentas Life Sciences International — was announced May 27.
But that’s not to say that the company emerged from the downturn unscathed.
“We had to make some tough decisions, but we managed to keep investing in research and development, keep making acquisitions and continue to give merit raises to our employees,” CEO Marc Casper said.
However, Thermo has closed, or is in the process of closing, 20 facilities worldwide, amid a restructuring program announced at the end of 2008. Casper would not comment on the number of jobs lost but said that, at more than 35,000 employees currently, head count is the highest in the company’s history. The company’s strategic plan includes moving more production to so-called low-cost regions, such as China and Mexico.
The company also plans to keep up the buying spree. Since the May 2006 merger between Thermo Electron and Fisher Scientific, there have been at least 40 significant purchases.
The company has $1.4 billion in cash and cash equivalents as of April 3. Analysts say management has indicated it is willing to take on more debt to deepen its pool of capital even further.
“They have said they are willing to have a 3-to-3.5 debt to EBITDA ratio — and remember, the (earnings before interest, taxes, depreciation and amortization) of the companies Thermo acquires would add to that,” said Robert Hawkins, a vice president and life sciences analyst at investment bank Stifel Nicolaus and Co. Inc.
Wall Street is watching carefully to see if the company decides to go after a really big fish. After all, it was widely reported earlier this year that Thermo made an offer of $6 billion for Billerica-based Millipore Corp., before losing out to a $7.2 billion bid from German drug maker Merck KGaA. Thermo officials say they have never acknowledged that those reports were correct and declined to speak on the matter. One analyst called it “the fish they’re glad got away,” indicating that investors responded positively to Thermo’s refusal to be drawn into a bidding war over Millipore. Analysts have named companies including Milford-based Waters Corp. and Carlsbad, Calif.-based Life Technologies as potential future targets.
“It’s not the size of the company that matters, it’s whether it fits into our overall strategy,” Casper said, demurring on whether a large purchase would close this year. Casper said the company is in a good position to take advantage of advantageous trends, such as the aging population and increased consumer concern about the safety of food and other products.
He also said global economic stimulus programs have boosted the company. Thermo recorded $50 million in revenue from these programs in 2009 and has already taken in $60 million in the first quarter of 2010. Much of this demand, Casper said, is coming from China and Japan, which are increasing purchases of mass spectrometers, tools designed to separate substances, for use in food safety programs.
But the company acknowledges that it faces some headwinds — namely, consolidation in the pharmaceutical industry that could shrink the number of potential clients, and the still-constrained budgets of some customers.
That said, Thermo’s first-quarter report clearly demonstrated the company’s bounce back from the downturn. Thermo Fisher Scientific (NYSE: TMO) recorded net income of $232.3 million for the first quarter of 2010, up 56 percent from first-quarter 2009 profits of $148.9 million.
The company booked revenue of $2.68 billion for the first quarter of 2010, up 19 percent from the corresponding period last year. Thermo’s stock price closed at $50.94 on Tuesday. It has traded between $37.50 and $57.40 over the past year.
Comments
If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.
RSS Feeds
