NEW YORK - U.S. scientific instruments maker Thermo Fisher Scientific Inc said on Thursday it agreed to buy privately held Brahms AG for about $470 million to acquire the German company's line of diagnostic tests and expand its manufacturing presence in Europe.
Thermo, whose shares rose more than 2 percent, said the deal is expected to close in September and add to its earnings per share next year.
While this is a relatively small deal, it is a good example of the type of high growth 'tuck-in' Thermo can pursue accretively, Cowen and Co analyst Doug Schenkel said in a research note, adding that he expects Brahms to generate less than 1 percent of Thermo's 2010 sales.
The news comes a day after diversified U.S. manufacturer Danaher Corp said it would buy two scientific instrument businesses for a total of $1.1 billion.
Thermo rival PerkinElmer Inc has also been active on the acquisition front, announcing several small deals a year. PerkinElmer Chief Executive Officer Robert Friel told Reuters in July that the company was closing in on one or two more deals in the $50 million to $100 million range.
Brahms, which had revenue of about $105 million in 2008, is owned by Swiss buyout firm HBM Partners and its own senior management, which last year told Reuters that it was likely to become a public company in the foreseeable future. Instead, it will become part of a much larger publicly traded company in Waltham, Massachusetts-based Thermo Fisher.
We view this deal as positive for Thermo as it bolsters Thermo's niche diagnostic platform and immunoassay offering -- two high growth areas that are relatively insulated from economic downturns, Thomas Weisel Partners analyst Peter Lawson said in a research note.
Brahms's top product is a biomarker for the diagnosis and treatment of sepsis, a potentially life-threatening condition in which the blood is overwhelmed by bacterial infection. It also has diagnostic tests for cardiovascular and pulmonary diseases, as well as intensive care treatments and prenatal screening -- an area in which PerkinElmer is one of the world's leading companies.
Brahms is a significant addition to our specialty diagnostics portfolio, bringing exciting new products and technologies to an area of our company that offers some of our greatest opportunities for growth, Thermo Fisher Chief Executive Marijn Dekkers said in a statement.
In addition, the company gives us a significant reagent manufacturing footprint in Europe, Dekkers said.
Brahms, which has about 400 employees, also has a promising pipeline of diagnostic tests in development.
Last year at a major heart meeting, it presented late-stage clinical data for a new biomarker blood test to identify heart failure patients in most dire need of treatment when they turn up at an emergency room complaining of shortness of breath. The Brahms test proved to be significantly better than current standard tests.
Thermo shares were up $1.03, or 2.4 percent, at $44.31 in afternoon trading on the New York Stock Exchange. (Reporting by Bill Berkrot; additional reporting by Chakradhar Adusumilli in Bangalore; editing by Gerald E. McCormick)