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Timing risk in Life Technologies deal

by William McConnell | Published May 8, 2013 at 9:42 AM

The proposed $13.6 billion acquisition of Life Technologies Corp. by Thermo Fisher Scientific Inc. faces few substantive regulatory hurdles, but the companies warn regulatory approval might not come until January 2014. Analysts said that's because of uncertainty about the timing of overseas antitrust approvals, particularly from China.

The companies announced their plans to merge on April 14, with Thermo Fisher agreeing to pay $76 per share in cash. According to the companies' agreement, if failure to obtain necessary antitrust approval prevents the merger from closing by Jan. 14, 2014, the per share price will increase by just over 0.6 cents per day.

When the deal was announced, Thermo Fisher CEO Marc Casper wouldn't get into specifics about the antitrust review, saying only that the company has good lawyers.

"It's obviously an area that we're very well advised," he said. "We have terrific counsel in this area. And as we look at the process going forward, we would expect to close the transaction early in 2014. And certainly we're not going to speculate on what the governments might think, but we feel good about the process going forward."

During an April 15 conference call, JPMorgan Chase & Co. analyst Tycho Peterson suggested that there might be overlaps in bioproduction services and polymerase chain reaction products used to copy DNA, but Casper wouldn't comment on the suggestion.

Another analyst who has examined the deal said both companies' extensive product lines make it difficult to predict exactly how much competitive overlap there is and which products, if any, might be required to be divested. The Federal Trade Commission will review the deal in the U.S.

The biggest uncertainly, the analyst said, is predicting the timing of approvals overseas, particularly from China's Ministry of Commerce, which is prone to lengthy antitrust reviews even when it ultimately imposes no conditions on a merger approval.

In the end, however, Peterson predicted that the regulatory hurdles will not stop the deal.

The primary aim of the acquisition is to make Waltham, Mass.-based Thermo, the world's largest maker of scientific and laboratory equipment, a leader in genetic sequencing and other aspects of personalized medicine that can tailor treatments to patients. Life Technologies, with headquarters in Carlsbad, Calif., is considered second behind Illumina Inc. in the race to produce faster and less expensive gene sequencing technology.

San Diego-based Illumina last year rejected a $6.8 billion hostile takeover bid by Swiss drugmaker Roche Holding AG, but the company could find itself courted by suitors again now that its rival is being scooped up by a larger company.

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William McConnell

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