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Thermo Fisher Buying Transplant Dx Firm One Lambda for $925M

NEW YORK (GenomeWeb News) – Thermo Fisher Scientific today announced it intends to buy transplant diagnostics firm One Lambda for $925 million in cash.

Founded in 1984, the Canoga Park, Calif.-based firm develops tests that are used by transplant centers for tissue typing, mainly for determining compatibility between donors and recipients and for detecting the presence of antibodies that can result in transplant rejection.

Privately held One Lambda has about 320 employees and serves more than 1,400 laboratories globally. In 2011, it generated $182 million in revenues. It will become part of Thermo Fisher's Specialty Diagnostics Segment after completion of the deal, expected in the fourth quarter.

"One Lambda gives us access to the attractive transplant diagnostics market and complements our existing immunosuppressant monitoring assays," Thermo Fisher President and CEO Marc Casper said in a statement. "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 capital."

The deal is expected to add between $.09 and $.11 to Thermo Fisher's 2013 adjusted EPS. In 2015 the deal is expected to provide revenue and cost synergies of $15 million, the company said.

Casper added that the company will collaborate with One Lambda founder Paul Terasaki and the Terasaki Foundation Laboratory.

The $925 million purchase price includes the cost of a three-year retention program One Lambda created for key employees, amounts payable to certain shareholders for non-competition agreements, and a one-year earn-out provision based on certain financial targets being achieved.

According to Thermo Fisher, the acquisition will enhances its footprint in the specialty in vitro diagnostics space by providing technology that supports a "broad portfolio of high-margin reagents in two major categories of transplant testing, human leukocyte antigen testing and antibody detection."

One Lambda's diagnostic tests for HLA typing and antibody detection pre- and post-transplant also complement Thermo Fisher's immunosuppressant assays used for monitoring drug therapies in post-transplant patients to prevent further transplant rejection.

Additionally, Thermo Fisher said it expects to leverage its extensive commercial capabilities in emerging markets to accelerate growth in One Lambda's existing product portfolio, which is marketed mostly to US-based physicians and laboratories.

Thermo Fisher said the deal will result in greater tax efficiencies for the firm. The two companies expect to make an election under the Internal Revenue Code that will increase Thermo Fisher's tax basis in the acquired assets, resulting in annual cash tax savings of about $19 million over 15 years, which will yield a net present value benefit of $190 million for Thermo Fisher.

Thermo Fisher will fund the deal through a combination of cash on hand and new debt financing. JP Morgan is its financial advisor on the deal, while Perella Weinberg Partners is advising One Lambda.

Thermo Fisher also said today that its board has authorized the repurchase of an additional $500 million worth of its common stock. The new share buyback program will last through Dec. 31, 2012. Under its existing buyback program, which expires Nov. 9, 2012, Thermo Fisher has $250 million remaining.

After a sluggish mergers and acquisitions market in first-half of the year, today's deal is the fourth acquisition announced since July 1 in the 'omics-related life science tools and molecular diagnostics spaces, following 23andMe's purchase of CureTogether, Luminex's buy of GenturaDx, and Tegal's purchase of CollabRx.