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Blog Coverage: Thermo Fisher to Acquire Patheon; Expects to Realize Multiple Synergies from the Transaction

LONDON, UK / ACCESSWIRE / May 16, 2017 / Active Wall St. blog coverage looks at the headline from Thermo Fisher Scientific Inc. (NYSE: TMO) and Patheon N.V. (NYSE: PTHN). Thermo Fisher Scientific announced on May 15, 2017, an agreement, under which it will acquire Patheon, a leading global provider of high-quality drug development and delivery solutions to the pharmaceutical and biopharma sectors. Thermo Fisher will commence a tender offer to acquire all of the issued and outstanding shares of Patheon for $35.00 per share in cash. The net transaction amount stands at about $7.2 billion, including a debt assumption of about $2.0 billion. Register with us now for your free membership and blog access at:

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Patheon's Portfolio

Patheon is a leading provider of comprehensive, integrated and customizable solutions where it holds expertise to help biopharmaceutical Companies of all sizes enable complex development and manufacturing needs. The Company is the industry leader in the high -growth, $40 billion CDMO market, which is driven by growing customer demand for end-to-end solutions, flexible and scalable capacity, and regulatory expertise. Patheon holds an extensive portfolio of state-of-the-art facilities, in its primary areas of operation, i.e., North America and Europe, with about 9,000 professionals worldwide. The Company will become part of Thermo Fisher's Laboratory products and Service Segment post the acquisition. Patheon generated full-year FY16 revenues of about $1.9 billion.

Strategic Benefits from the Transaction

1. Entry into the CDMO market - Patheon is a leading provider in a large, fragmented market growing in the mid-single to high-single digits, which is driven by a strong demand for outsourcing services that allows customers to simplify the supply-chain networks. By offering both small- and large-molecule development and manufacturing solutions, the Company can enable the customers to reduce the time and cost for delivering medicines to market. Patheon has invested in a significant proportion to become a leading player in the CDMO market and Thermo Fisher expects to utilize this feature for its portfolio growth.

2. Creation of Multiple Synergies - Both Patheon and Thermo Fisher have their own set of enterprise clients and this merger will enable the Companies to enable significant cross-selling opportunities in the biopharma industry. The transaction is expected to be immediately and significantly accretive to Thermo Fisher's adjusted EPS by $0.30 in the first full year after the closing of the transaction. The Company expects to realize total synergies of about $120 million within three years following the closing of the transaction; consisting of about $90 million of cost synergies and about $30 million of adjusted operating income benefit from revenue-related synergies.

3. Two highly complementary services - Thermo Fisher is a leading supplier to the biopharmaceutical industry, supporting research, clinical trials, and production. The Company has become a trusted outsourcing partner by offering clinical trials logistics services over the past decade. Hence, combining these abilities with Patheon's CDMO services will enable Thermo Fisher to be a stronger partner for pharmaceutical and biotech customers. Thermo-Fisher recently announced on May 03, 2017, that it has developed a novel cell washer to help clinical, hospital, and serological laboratories, as well as a blood bank and transfusion centers. A new automated, high-performance cell washer has been developed to enable precise, thorough, reproducible and rapid blood cell washing of up to 24 tubes in a three-minute run.

Financing Details

The transaction is expected to close by the end of FY17 and is subject to customary closing conditions, including the receipt of applicable regulatory approvals, the adoption of certain resolutions relating to the transaction at an Extraordinary General Meeting of Patheon's shareholders, and completion of the tender offer. Thermo Fisher has additionally entered into tender and support agreements with affiliates of JLL Partners and Royal DSM, whose collective stake is about 73% in the Company, under which the shares will be tenders in the transaction.

Stock Performance

On Monday, May 15, 2017, the stock closed the trading session at $172.26, slightly up 0.43% from its previous closing price of $171.52. A total volume of 2.28 million shares have exchanged hands, which was higher than the 3-month average volume of 1.56 million shares. Thermo Fisher Scientific's stock price surged 13.19% in the last month, 10.28% in the past three months, and 11.82% in the previous six months. Furthermore, since the start of the year, shares of the Company have rallied 22.20%. The stock is trading at a PE ratio of 31.39 and has a dividend yield of 0.35%. The net market capital for the Company was $57.35 billion as per the last valuation.

At the close of yesterday's trading session, Patheon's stock price soared 33.08% to end the day at $34.60. A total volume of 44.87 million shares were exchanged during the session, which was above the 3-month average volume of 497.04 thousand shares. Shares of the company have a PE ratio of 56.17 and currently have a market cap of $4.99 billion.

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