Thermo Fisher Scientific (TMO) plans to raise funds in three installments – $300 million of 2.05% senior notes due 2014 (issued at 99.971% of the principal amount), $900 million of 3.2% senior notes due 2016 (issued at 99.939% of the principal amount), and $1 billion of 4.5% senior notes due 2021 (issued at 99.353% of the principal amount).
Apart from general corporate purposes, proceeds from the issue will be utilized to meet the company’s proposed acquisition of Dionex Corporation (DNEX).
Thermo Fisher has undertaken several acquisitions in the past, the latest being, Dionex for $2.1 billion. Recently, the tender offer to acquire the shares of Dionex was extended until April 7, 2011.
By combining the ion and liquid chromatography capabilities of Dionex with its existing chromatography offering, Thermo Fisher expects to create an industry-leading chromatography portfolio. This in turn will further strengthen its lead position in the mass spectrometry business.
The company will also benefit from Dionex’s extensive customer base in applied markets such as environmental, food safety and other industrial sectors. Moreover, with more than 35% of revenues being derived from Asia Pacific and other emerging geographies, Dionex fits perfectly with Thermo Fisher’s strategy of expansion in these high-growth regions.
Thermo Fisher exited fiscal 2010 with $917.1 million in cash and cash equivalents and debt level of $2.14 billion. During the year, the company deployed $600 million for 11 complimentary acquisitions. For 2010, Thermo Fisher has spent slightly more than $1 billion on its buyback program and was left with $488 million in its authorization.
As a result of this continuous buyback program, the outstanding share count at the end of the fourth quarter remained at 398.8 million, down 5.5% from the year-ago period, thus boosting the bottom line.
We are currently Neutral on the stock.
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