Scientific instruments maker Thermo Fisher Scientific (NYSE:TMO) said it agreed to acquire chromatography systems maker Dionex Corp (NASDAQ:DNEX) for about $2.1 billion to expand in Asia-Pacific regions such as China.
Chromatography is a technique for separating mixtures of coloured chemicals. This technique is important in biology as well as chemistry and it is also used by forensic scientists.
Waltham, Massachusetts-based Thermo Fisher will pay $118.50 in cash for each share of Dionex, representing a premium of 21 percent to Dionex closing price on Dec.10.
Diomex shares surged $19.83, or 20 percent, in the pre-market hours Monday to trade at $118. On Friday, they closed at $98.17 on Nasdaq.
The deal boosts Thermo Fisher's strong presence in China, where it has the headquarters for its global environmental instruments business.
The merger combines Sunnyvale, California-based Dionex's ion and liquid chromatography portfolio with Thermo Fisher's existing chromatography capabilities. The acquisition also expands Thermo Fisher's presence in attractive applied markets industry, including environmental analysis, water testing and food safety.
Thermo Fisher expects the deal to add 13 cents to 15 cents a share to its earnings in the first 12 months following the close and to realize operating synergies of $60 million in third year following the transaction's close through a combination of cost savings and revenue enhancements.
We believe the combination of Thermo Fisher and Dionex is extremely compelling from a technology, market and financial perspective, said Marc Casper, CEO of Thermo Fisher. Dionex's strength in chromatography instruments, software and consumables complements our leading positions in mass spectrometry and laboratory information management systems.
Founded in 1975, Dionex has more than 1,600 employees in 21 countries spanning six continents, including a significant presence in the Asia-Pacific region. For the full year, the company's profit rose to $59.0 million or $3.28 per share from $55.4 million or $3.04 per share last year. Sales rose 9 percent to $419.6 million.
Thermo Fisher intends to use cash on hand and proceeds from committed financing from Barclays Capital and J.P. Morgan Securities LLC to facilitate the transaction.
The transaction is expected to be completed in the first quarter of 2011, subject to the satisfaction of customary closing conditions, including applicable regulatory approvals.
Upon completion of the deal, Dionex will be integrated into Thermo Fisher's Analytical Technologies Segment.
Barclays Capital and J.P. Morgan Securities LLC are acting as financial advisors to Thermo Fisher, while Goldman, Sachs & Co. is acting as financial advisor to Dionex.
Shares of Thermo Fisher were up 77 cents or 1.45 percent at $53.81 in the pre-market hours Monday. On Friday, they closed at $53.04 on NYSE.