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LIFE Takeover Battle Heats Up

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In its ongoing quest for strategic acquisitions, Thermo Fisher Scientific Inc. (TMO) is not ready to easily lose its chance to takeover Life Technologies (LIFE). According to several media sources, Thermo Fisher managed to bid a higher purchase price for Life Technologies compared with the bid by the private equity consortium of $11.1 billion or $65 per share. This market rumor continued to stimulate investors’ optimism helping Life Technologies and Thermo Fisher to reach their respective 52-week highs of $67.92 and $81.54 on Wednesday.

According to a Reuters report, a consortium of some private equity firms was formed to takeover Life Technologies with a bid close to $65 per share. Immediately after that, last Tuesday, Thermo Fisher placed a bid at the high end of its earlier intended range of $65−$70 per share. However, the private equity consortium which includes Blackstone Group LP, Carlyle Group LP and KKR & Co LP, are currently reworking to place a new bid for Life Technologies. The consortium primarily is working on securing the equity needed for the takeover.

According to Reuters, Thermo Fisher was preparing to buy Life Technologies since the latter declared that it is looking for a prospective buyer.

Our Take

Over the past several years, Thermo Fisher has acquired several entities, which have added complimentary technologies, expanded presence in high-growth markets, generated cost and revenue synergies, thereby increasing shareholder value. Although the takeover of Life Technologies still remains uncertain, if it wins, the materialization will turn out as the biggest ever deal for Thermo Fisher since its inception in 2006. The acquisition, if it occurs, is expected to create a solid position for Thermo Fisher in the field of genetic research and analysis.

From the Life Technologies' point of view, even after being in an uptrend, the company’s last closing price of $66.58 lags the high end of Thermo Fisher’s bidding range, making the deal profitable for its shareholders. As the bidding process is still on, we expect further increase in the binding price, which will help LIFE shareholders gain more.

Currently, both Thermo Fisher and Life Technologies carry a Zacks Rank #3 (Hold). However, other stocks that are performing better in the medical device sector with a Zacks Rank #1 (Strong Buy) include Given Imaging (GIVN) and Cyberonics Inc. (CYBX).

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