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Thermo Fisher to Offer Senior Notes to Fund Acquisition

NEW YORK (GenomeWeb News) – Thermo Fisher Scientific today said that it intends to offer senior notes to cover the cost of its $925 million acquisition of One Lambda.

Thermo Fisher has not yet placed a value on the notes it intends to sell, but in a filing with the US Securities and Exchange Commission it said the notes would be due in 2018 and 2023. Joint book-running managers for the notes offering are Goldman Sachs, JP Morgan Securities, and RBS Securities.

Thermo Fisher announced the deal in July to acquire the transplant diagnostics firm. 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.

Immediately after announcing the deal, Thermo Fisher's unsecured senior rating and notes were downgraded by Moody's Investors Service one notch to Baa1 from A3. Fitch Ratings also downgraded Thermo Fisher Scientific's long-term Issuer Default Rating and senior unsecured rating to BBB+.

Today, Fitch assigned a BBB+ to the proposed senior notes with a stable outlook. It noted that Thermo Fisher's acquisitions of Phadia and Dionex in 2011 pushed up the firm's debt-to-EBITDA to 2.6x as of June 30, 2012, versus around 1x before the transactions.