(Reuters) – Medical device maker Thermo Fisher Scientific Inc said on Thursday it would acquire contract researcher PPD Inc for $17.4 billion as it adds more muscle to its pharmaceutical services business.
Thermo Fisher, the world’s largest maker of scientific instruments, will pay $47.50 per share – a premium of 10.6% to PPD’s Wednesday closing price.
Over the past few years, Thermo Fisher has doubled down on boosting its business of supplying raw materials used to make treatments and signed several deals.
It bought Brammer Bio, a viral vector manufacturer for gene and cell therapies, for $1.7 billion in 2019, and Patheon, a Dutch manufacturer of drugs for clinical trials, in 2017.
“The acquisition of PPD is a natural extension for Thermo Fisher,” said Thermo Fisher Chief Executive Officer Marc Casper.
PPD, which went public last year, helps companies in the drug development process through preclinical consulting, designing and conducting clinical trials, and providing patient support. It was hired by Moderna Inc to oversee its COVID-19 trial sites.
Contract research organizations (CROs) which were hurt last year after clinical trials were disrupted due to the COVID-19 pandemic, have seen a resurgence in demand as drugmakers and governments invest in newer treatments.
The PPD deal is expected to add $1.40 to Thermo Fisher’s adjusted earnings per share in the first 12 months after its close, expected by the end of 2021, Thermo Fisher company said.
Barclays Capital Inc and Morgan Stanley & Co LLC are serving as financial advisers to Thermo Fisher, while J.P. Morgan Securities LLC is the financial adviser for PPD.
The Wall Street Journal reported late Wednesday that Thermo Fisher was nearing a deal to acquire PPD.
Reporting by Manojna Maddipatla, Manas Mishra and Mrinalika Roy in Bengaluru; Editing by Bernard Orr, Sherry Jacob-Phillips and Shinjini Ganguli