With Hopes to Lead CRO Industry, Thermo Fisher Bids $17.4 Billion on Latest Acquisition

April 15th, 2021—Earlier today, Thermo Fisher Scientific Inc. made yet another acquisition announcement, this time for a leading global Contract Research Organization (CRO).

The Waltham, MA-based giant has entered a definitive agreement to acquire PPD, Inc. at $47.50 per share, which amounts to $17.4 billion, plus the assumption of $3.5 billion of net debt. That’s a 24% premium on PPD’s unaffected closing stock price on April 13th. Since the news broke out, PPD’s stock price soared 17% in early trading.

“This is a very exciting announcement for our shareholders and will provide customers with an even better opportunity to bring meaningful innovation to the market faster and more efficiently. Thermo Fisher is a world-class company with a very similar culture and values and will provide a great foundation for our colleagues to continue to deliver for our customers and to develop their own skills and careers,” said David Simmons, Chairman and Chief Executive Officer of PPD.

Targeting Dominance in Clinical Research Services

Headquartered in Wilmington, North Carolina, PPD’s CRO services reach far and wide across the globe. Launched as a one-person consulting firm in 1985, PPD has steadily grown into a leading CRO boasting over 26,000 employees operating in 47 countries. It now serves a booming, $50 billion industry comprising new and established biotech and pharma companies. Despite the pandemic, PPD reported revenue of $4,681.5 million in 2020, a 16.1% increase to previous years’ $4,031.0 million.

PPD’s acquisition will establish Thermo Fisher “as one of the global leaders in the attractive, high growth clinical research services industry,” the company said in a statement.

“Pharma and Biotech is our largest and fastest growing end market, and our customers value us as a strategic partner and an industry leader. The acquisition of PPD is a natural extension for Thermo Fisher and will enable us to provide these customers with important clinical research services and partner with them in new and exciting ways as they move a scientific idea to an approved medicine quickly, reliably, and cost effectively,” said Marc N. Casper, Chairman, President, and Chief Executive Officer of Thermo Fisher Scientific.

“Longer term, we plan to continue to invest in and connect the capabilities across the combined company to further help our customers accelerate innovation and drive productivity while driving further value for our shareholders,” he added.

Thermo Fisher’s Acquisition Spree

Thermo Fisher has flourished in sequencing, bioprocessing, and viral vector manufacturing areas by forging some high-end acquisitions over the years. In 2014, it bought Life Technologies Corporation for a whopping US$ 13.6 billion and followed it up with Affymetrix (2016), Patheon (2017), and Brammer Bio (2019). So far in 2021, the company has signed two cash buyout deals—Henogen, Novasep’s viral-vector manufacturing division in Belgium, and Mesa Biotech, a COVID-19 diagnostic company.

In 2020 though, there was a big fish that got away. Thermo Fisher’s offer to acquire Qiagen for $11.5 billion lapsed due to unsatisfied shareholders. The company will hope to complete the PPD deal successfully and not let it go the Qiagen way.

“Both companies have complementary mission-driven cultures, and I can’t wait to welcome PPD’s colleagues from around the world to Thermo Fisher once the transaction is completed,” Casper added.

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Author

Rajaneesh K. Gopinath