Thermo raising $2.2B in stock sale to fund Life Tech buyout

Thermo Fisher CEO Marc Casper

Thermo Fisher ($TMO) is selling off $2.2 billion of its common stock, looking to raise funds to help close out its $13.6 billion buyout of Life Technologies ($LIFE).

Thermo expects to settle the sale by early next year, when the company figures it will complete the Life acquisition, and it's authorizing J.P. Morgan and Barclays to run the books on the stock sale, adding a $330 million over-allotment option to the $2.2 billion offering.

Under the Life buyout deal, announced in April, $13.6 billion pays solely for the company; Thermo is also on the line for $2.2 billion in outstanding debt. Thermo said it would fund the acquisition with about $10 billion of cash and debt and another $4 billion in equity, so the latest stock offering could be an effort to make up the difference.

Thermo's stock slipped about 1.2% overnight after the announcement, and analysts have split over whether Life's future justifies the hefty price tag. Life lags behind Illumina ($ILMN) in the gene sequencing space, and while its genetic analysis business grew 3% to $365 million last quarter, Life has struggled with research consumables, its largest unit, which dropped 3% to $409 million.

However, Thermo is rosy that its high-cost buyout will create "the ultimate partner for our customers and significant value for our shareholders," CEO Marc Casper has said, and the merger will spur 30% annual revenue growth and save Thermo about $275 million by year three, according to the company.

And while analysts question Thermo's excitement over a second-place finisher, some Life investors think the deal is too cheap. They have filed a suit against the company's board and are alleging an unfair sale process.

- read the announcement

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