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Thermo Fisher to Buy Chromatography Firm Dionex for $2.1B


This story originally ran on Dec. 13 and has been updated to include additional information.

By Adam Bonislawski

Thermo Fisher Scientific this week announced plans to acquire chromatography firm Dionex for roughly $2.1 billion.

The purchase, which is expected to close in the first quarter of 2011, will add a range of ion and liquid chromatography products to Thermo Fisher's portfolio, including platforms aimed at proteomics research like Dionex's UltiMate 3000 RSLCnano LC system.

Under the terms of the deal, Thermo Fisher will pay $118.50 per share in cash, representing a 21 percent premium to Dionex's closing share price of $98.17 on Dec. 10, the last trading day prior to the announcement. The $118.50 per share is a 32 percent premium to the Sunnyvale, Calif.-based company's average closing stock price over the last 60 days.

Thermo Fisher said the acquisition is expected to be accretive by $0.13 to $0.15 to its earnings per share in the first 12 months after its close and realize total operating synergies of $60 million by the third year, including $40 million from cost-related synergies and $20 million from adjusted operating income from revenue-related synergies.

"Dionex's strength in chromatography instruments, software, and consumables complements our leading positions in mass spectrometry and laboratory information systems," Marc Casper, Thermo Fisher president and CEO, said in a statement.

The deal's impact on Thermo Fisher's proteomics offerings will revolve primarily around the two firms' nano-LC portfolios. In its 2010 annual report, Dionex characterized its nano-LC market share as "smaller but growing" and noted that it had seen "very strong interest" for the new UltiMate 3000 RSLCnano high-pressure nano HPLC system.

In April, Thermo Fisher purchased nano-LC firm Proxeon, acquiring its Easy-nLC platform and sample prep portfolio, giving it an integrated LC-mass spec offering for proteomics researchers in need of high-performance chromatographic separation (PM 4/16/2010). In September Andrew Altman, the company's vice president and general manager for LC/LCMS, told ProteoMonitor that it had no good numbers on what portion of the nano-LC market it currently controlled but that, pre-acquisition, Proxeon was estimated to hold a 10 percent market share (PM 09/03/2010).

The purchase continues the company's recent focus on enhancing its existing mass spectrometry platforms with deals and product releases aimed at adding to the pre- and post-mass spec portions of its workflows.

During the company's second-quarter earnings call in July, Casper emphasized the Proxeon purchase as well as the release of new informatics products such as its PinPoint software package for SRM assay development.

At this year's ASMS meeting, Iain Mylchreest, vice president and general manager of Life Sciences Mass Spectrometry, told ProteoMonitor that the company was trying to emphasize that "it's not all just about the mass spectrometer. We're evolving our portfolio of capabilities because as the challenge changes, you've got to bring some new tools out, whether that's cleaning a sample up or fishing into a sample to look at a specific type of peptide. You've got to look at the entire workflow."

In addition to its nano-LC offerings, Thermo Fisher will also obtain Dionex's recently released UHPLC+ product, which adds UHPLC compatibility to all of the company's HPLC lines. The conversion of HPLC systems to UHPLC systems represents a significant growth opportunity for instrument manufacturers, but many existing HPLC users — especially those that run regulated testing assays such as pharmaceutical QA-QC protocols — have been hesitant to shift their LC work to a new platform (PM 10/29/2010). Crucial to the adoption of UHPLC technology is backwards UHPLC-HPLC compatibility such as that offered by the UHPLC+ system.

Also a significant pick up for Thermo Fisher will be Dionex's Chromeleon chromatography data management system. Calling it the "gold standard" for chromatography informatics, Casper said the company hopes to couple the system to its existing laboratory information management systems to "accelerate the [market] penetration" of the platform.

Thermo Fisher also expects the acquisition will help it achieve increased penetration for its own mass spec platforms as it markets them to existing Dionex customers, Casper said. In particular, it anticipates the deal will provide increased access to the Asia-Pacific market, where Dionex currently generates more than 35 percent of its revenues compared to 17 percent for Thermo Fisher.

During its 2010 fiscal year ended June 30, Dionex posted revenues of $419.6 million, up 9 percent from $385 million in fiscal 2009. The company had a profit in fiscal 2010 of $60.4 million, or $3.28 per share, up 8 percent from $56.1 million, or $3.04 per share, in fiscal 2009.

In its first quarter of fiscal 2011, revenues rose more than 13 percent to $102.9 million from $90.7 million in the year-ago period. Sales of its HPLC systems during the quarter were particularly strong – up 31 percent. Profits rose 7 percent to $11.3 million, or $0.62 per share, from $10.6 million, or $0.57 per share, a year ago.

The Dionex acquisition will be the latest of several moves by Thermo Fisher in recent years to build its chromatography offerings. In addition to the Proxeon buy, the company purchased Cohesive Technologies — a manufacturer of LC and sample-prep products — in December 2006 and SwissAnalytic Group, which included Flux Instruments — a maker of HPLC pumps and software — in January of 2007. It also launched its own Accela HPLC system in 2006.

Have topics you'd like to see covered in ProteoMonitor? Contact the editor at abonislawski [at] genomeweb [.] com.