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Thermo Fisher Scientific Inc (TMO.N) said it would sell three businesses to General Electric Co's (GE.N) healthcare unit for $1.06 billion, a deal that will enable Thermo Fisher to secure European antitrust approval for its acquisition of Life Technologies Corp (LIFE.O).
In November, the European Union Thermo Fisher's $13.6 billion acquisition of Life Technologies, a deal that will make it one of the top two genetic testing companies.
ISI Group analyst Ross Muken said the deal "is one of the last pieces of the puzzle for the Life transaction to move toward ultimate completion."
He called the price paid for the Thermo assets "very attractive" and raised his price target on Thermo Fisher shares to $121.50 from $111.
Thermo Fisher said its cell culture, gene modulation and magnetic beads businesses, expected to have combined revenue of about $250 million in 2013, will become part of GE Healthcare's life sciences business.
GE was one of a handful of companies that bid for the Thermo Fisher businesses being divested, according to a person familiar with the situation who wished to remain anonymous because he is not permitted to speak to the media. When Thermo Fisher's acquisition of Life Technologies was announced last spring, a number of healthcare companies and private equity firms expressed interest, but only a handful were invited to bid, the person said.
The cell culture business bought by GE produces liquids used to develop biotech medicines and vaccines.
GE said the magnetic beads products, used in microbiology instruments, will be added to its existing technologies in protein analysis and medical testing.
Thermo Fisher's gene modulation technologies will also aid GE in drug research, Kieran Murphy, president and chief executive of GE Healthcare Life Science's division, told Reuters.
GE sees the acquisition as a complementary addition to its business as it believes that bioprocessing and particularly cell therapy will continue to grow at a fast pace in years to come, Murphy said.
"These are going to be high single digit, low double digit growth areas, so we have been extremely good about playing that space," Murphy said.
GE Healthcare is not looking to make any more acquisitions imminently, Murphy said. "We will look at things, but we are not looking to buy growth at this point, he said. "We don't need to."
Thermo Fisher said it does not expect any more divestitures would be necessary to receive U.S. approval for the deal, which is expected to close early this year. ISI Group's Muken said he sees the closing of the Life acquisition as soon as this month as still possible.
Citigroup (C.N) served as the financial adviser and Hogan Lovells served as the legal adviser to GE Healthcare, while Barclays (BARC.L) and Wilmer Cutler Pickering Hale & Dorr LLP served as the advisers to Thermo Fisher.
Thermo Fisher shares were down 37 cents to $109.68, while GE shares were off 17 cents at $27.31 in afternoon trading on the New York Stock Exchange.
(Additional reporting by Esha Dey and Vrinda Manocha in Bangalore and Bill Berkrot in New York; Editing by Don Sebastian and David Gregorio)
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