Dive Brief:
- Thermo Fisher Scientific agreed to pay about $4.1 billion in cash to acquire Solventum’s purification and filtration business.
- The technologies, used in the production of biologics and medical devices and for industrial applications, generated about $1 billion in revenue last year. The business employs about 2,500 people globally and will become part of Thermo Fisher’s life sciences solutions segment.
- The Solventum unit is highly complementary to Thermo Fisher’s bioproduction business that offers cell culture media and single-use technologies, Thermo Fisher CEO Marc Casper said in the Tuesday announcement.
Dive Insight:
Solventum’s filters and membranes are used to manufacture biopharmaceutical and medical technologies, microelectronics, and food and beverages. Thermo Fisher said the filtration portfolio will boost its capabilities for developing and manufacturing biologics.
“Solventum’s Purification & Filtration business will expand and add differentiated capabilities to our bioprocessing portfolio to better serve our customers in this rapidly growing market,” Casper said.
As part of Thermo Fisher, the business is expected to generate mid- to high-single-digit organic growth and enable strong margin expansion, the company said.
Leerink Partners analyst Puneet Souda, in a Tuesday note to investors, said the deal should bolster Thermo Fisher’s position in bioprocessing, which has primarily focused on cell culture media and single-use plastics, helping the company in the filtration category where Danaher and Repligen are more strongly positioned.
For Solventum, the healthcare business spun out of 3M last April, selling the purification and filtration unit will allow the company to pay down debt and sharpen its strategic focus. Solventum, in a separate statement, estimated it will receive $3.4 billion in net proceeds.
"The sale of the Purification & Filtration business is part of phase three of our transformation plan and follows a thorough analysis of the value and strategic alignment of our businesses," said CEO Bryan Hanson.
Solventum’s shares jumped 10% to $83.96 in midday trading, while Thermo Fisher was little changed at $536.09.
In the first year after closing, Thermo Fisher said the acquisition is projected to be dilutive to adjusted earnings per share by 6 cents, and accretive by 28 cents excluding financing costs. Thermo Fisher anticipates about $125 million in adjusted operating income from revenue and cost synergies by year five after the acquisition closes.
The deal is expected to be completed by the end of this year.
