Thermo Fisher Extends Buying Binge With Talks to Acquire Patheon

(Bloomberg) -- Thermo Fisher Scientific Inc., which became one of the world’s biggest manufacturers of diagnostic and testing equipment through acquisitions, has its sights on another deal.

The U.S. company is in talks to buy Patheon NV, a maker of drug ingredients that began trading less than a year ago, according to people with knowledge of the matter. An agreement could be reached as early as this week, the people said, asking not to be identified because the information is private.

Thermo Fisher has a market value of about $67 billion in New York, while Patheon is worth about $3.8 billion. Talks could still falter, and there’s no certainty a deal will be reached, the people said. Thermo Fisher and Patheon couldn’t immediately be reached for comment.

Patheon was formed in March 2014 through a merger of Canadian drugmaker Patheon Inc. and the pharmaceutical business of Dutch vitamin maker Royal DSM NV. Buyout firm JLL Partners, which controlled the original Patheon, and DSM are the two biggest shareholders. DSM shares rose 2.3 percent to 67.40 euros in Amsterdam trading.

Purchasing Patheon would add to the $22 billion in acquisitions announced by Thermo Fisher over the past five years, according to data compiled by Bloomberg. Last year, the Waltham, Massachusetts-based-company beefed up its suite of testing and technology services by buying electron microscope maker FEI Co. for more than $4 billion. The company now offers equipment, instruments and supplies to laboratories and medical research facilities and is a major player in technology used to sequence the human genome.

Patheon would bring the ability to make not just any medicines, but the more complex and harder to produce type grown out of living cells. Such biological therapies are increasingly important to drugmakers facing intense competitive pressure. Meanwhile, innovative companies that have pioneered biological therapies are increasingly turning to contractors to help manage costs or make production more efficient.

M&A Expansion

Thermo Fisher, led by Chief Executive Officer Marc Casper, in January reported fourth-quarter profit that beat estimates and a 2017 earnings forecast that topped some projections, helped by recent acquisitions.

Last year, Thermo Fisher bought Affymetrix Inc. to add technology used by researchers to study specimens at the cellular and genetic level. It bought DNA sequencer Life Technologies Corp. for more than $15 billion in 2014.

Patheon has risen 24 percent in New York trading since an initial public offering last year, which raised about $719 million, according to data compiled by Bloomberg. The company is incorporated in the Netherlands, with U.S. headquarters in Durham, North Carolina, and a total of 26 office locations serving clients in about 70 countries, according to its website.