The deal would net Waltham, Mass.-based Thermo Fisher (NYSE: TMO), the world’s largest maker of scientific and laboratory equipment, a significant gain in next-generation gene sequencing. At the same time, as with any consolidation of large companies, it potentially throws the future of some 1,200 Life Technologies employees in the Bay Area in flux.
Carlsbad-based Life Technologies (NASDAQ: LIFE), a developer and maker of tools and equipment for life sciences companies, recently said it would invest $18 million to expand its Pleasanton manufacturing facility. It also has operations in Foster City, South San Francisco and Benicia. It bought genetic information company Navigenics Inc. of Foster City last summer and in August 2010 bought South San Francisco’s Ion Torrent for $375 million in cash and stock.
Thermo Fisher reportedly beat out private equity group Blackstone Group LP. Roche Group, the parent company of South San Francisco’s Genentech Inc. and Roche Molecular Diagnostics in Pleasanton, at one time was identified in media reports as a bidder.
Yet some industry watchers say Thermo Fisher may be overpaying for Life Technologies.
“Even if the company manages to reaccelerate Life’s stagnant business and exceed estimated synergies, it is hard for us to view this acquisiton as value accretive at the price Thermo Fisher is paying,” Morningstar analyst Alex Morozov wrote in a research note, according to the Boston Business Journal. “Returns on invested capital will take yet another hit because of the rich price paid, and Thermo Fisher’s penchant for serial acquisitions gives us pause.”
Ron Leuty covers biotech, higher education and China for the San Francisco Business Times.