Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving
science, today announced that it has signed a definitive agreement to
acquire One Lambda, the leader in transplant diagnostics, for $925
million in cash, subject to a post-closing adjustment. The purchase
price includes the cost of a three-year retention program established by
One Lambda for the benefit of key employees, amounts payable to certain
shareholders for noncompetition agreements, and a one-year earn-out
provision based on the achievement of certain financial targets. The
transaction, which is expected to be completed in the fourth quarter of
2012, is expected to be immediately accretive upon close and add $0.09
to $0.11 to Thermo Fisher's 2013 adjusted earnings per share (EPS).
Founded in 1984 by Dr. Paul Terasaki, a pre-eminent researcher in the
field of transplantation, One Lambda is a pioneer in transplant
diagnostics. One Lambda's diagnostic tests are used by transplant
centers for tissue typing, primarily to determine the compatibility of
donors and recipients pre-transplant, and to detect the presence of
antibodies that can lead to transplant rejection. One Lambda is
privately held and has approximately 320 employees, primarily based in
Canoga Park, Calif., who serve more than 1,400 laboratories worldwide.
The business, which generated revenue of $182 million in 2011, will
become part of Thermo Fisher's Specialty Diagnostics Segment.
"One Lambda is an exciting addition to our specialty diagnostics
portfolio," said Marc N. Casper, president and chief executive officer
of Thermo Fisher. "The One Lambda team has pioneered market-leading
tests that are widely used across the transplant-testing workflow to
improve patient outcomes. With its strong technology platform, high
margin profile and good growth prospects, the business is perfectly
aligned with our specialty in vitro diagnostics strategy.
"One Lambda gives us access to the attractive transplant diagnostics
market and complements our existing immunosuppressant monitoring assays.
It also offers the opportunity to leverage our global commercial
infrastructure to serve growing transplant needs in emerging markets.
From a financial perspective, we expect One Lambda to be immediately
accretive to our adjusted EPS and to yield a strong return on invested
George M. Ayoub, co-founder, president and chief executive officer of
One Lambda, said, "We are excited about the opportunities ahead as we
join Thermo Fisher's specialty diagnostics business. I believe that,
together, we will increase the use of human leukocyte antigen (HLA)
typing and antibody detection to accelerate growth and improve the
success rate of transplantation. Importantly, we will continue to
fulfill our mission, which is to improve the quality of life for
transplant patients and their families."
Casper added, "We look forward to welcoming the One Lambda team to the
Thermo Fisher family. We are also pleased to announce that we will
collaborate with Dr. Terasaki and the Terasaki Foundation Laboratory,
which continues to support groundbreaking research in preventing
Benefits of the Transaction
Enhances Thermo Fisher's Presence in Specialty in vitro
Diagnostics: Growth in the transplant diagnostics market is being
driven by increasing global demand for transplant procedures and
post-transplant patient monitoring. This specialized technology
supports a broad portfolio of high-margin reagents in the two major
categories of transplant testing: HLA typing and antibody detection.
Adds New Capabilities to Complete the Transplant-Testing Workflow:
One Lambda's leading diagnostic tests for HLA typing and antibody
detection pre- and post-transplant will complement Thermo Fisher's
existing immunosuppressant assays that are used for monitoring drug
therapies in post-transplant patients to prevent transplant rejection.
Creates Opportunities to Leverage Thermo Fisher's Commercial
Infrastructure in Emerging Markets: Thermo Fisher expects to
leverage its extensive commercial capabilities in emerging markets to
accelerate growth in One Lambda's existing product portfolio, which is
currently marketed primarily to physicians and laboratories in the U.S.
Offers Compelling Financial Benefits: The transaction is
expected to be immediately accretive to Thermo Fisher's adjusted EPS
upon close, and accretive by $0.09 to $0.11 per share in 2013. It is
also expected to generate revenue and cost synergies for a total
adjusted operating income1 benefit of approximately $15
million in 2015. In addition, the transaction will result in greater
tax efficiencies by leveraging Thermo Fisher's global structure.
Fisher and One Lambda expect to make an election under section
338(h)(10) of the Internal Revenue Code that will increase Thermo
Fisher's tax basis in the acquired assets. This election will result
in annual cash tax savings of approximately $19 million over 15 years,
yielding a net present value benefit of approximately $190 million for
The implied 2011 EBITDA purchase price
multiple for One Lambda is approximately 10.9x. Including the tax
benefit, the implied 2011 EBITDA purchase multiple is approximately
Financing and Approvals
Thermo Fisher intends to fund the transaction through a combination of
cash on hand and new debt financing. The transaction, which is expected
to be completed in the fourth quarter of 2012, is subject to the
satisfaction of customary closing conditions, including applicable
J.P. Morgan Securities LLC is acting as financial advisor to Thermo
Fisher, and Wilmer Cutler Pickering Hale and Dorr LLP is serving as
legal counsel. Perella Weinberg Partners is acting as financial advisor
to One Lambda, and Sheppard, Mullin, Richter & Hampton LLP is serving as
Additional Stock Buyback Authorized
Thermo Fisher also announced that its board of directors has authorized
the repurchase of an additional $500 million of shares of its own common
stock in the open market or in negotiated transactions. The new
repurchase authorization will remain in effect through December 31,
2012. As of June 30, 2012, the company had $250 million remaining under
its existing share repurchase authorization, which expires November 9,
Casper concluded, "The acquisition of One Lambda, along with our new
stock buyback authorization, demonstrates our ongoing commitment to
effectively deploying our capital to create shareholder value."
Thermo Fisher Scientific Inc.