Did Pantheon Get Enough in Its Buyout?

Print Email

Pantheon N.V. (NYSE: PTHN) shares made a huge gain on Monday following the announcement that the company will be acquired by Thermo Fisher Scientific Inc. (NYSE: TMO). After the transaction takes place, Pantheon will become part of Thermo Fisher’s Laboratory Products and Services segment. Despite shares seeing this big gain, are investors getting enough in the buyout?

Thermo Fisher plans to commence a tender offer to acquire all the issued and outstanding shares of Patheon for $35.00 per share in an all cash deal. The transaction is valued up to roughly $7.2 billion, which includes the assumption of about $2.0 billion of net debt.

In 2016, Pantheon generated revenues of $1.9 billion with $0.93 in earnings per share. Prior to the shares jumping, Pantheon had a total market cap of $3.8 billion.

Pantheon is a leader in the high-growth, $40 billion contract development and manufacturing organization (CDMO) market, which is fueled by growing customer demand for end-to-end solutions, flexible and scalable capacity, and regulatory expertise. The company has an extensive network of state-of-the-art facilities, primarily in North America and Europe, and about 9,000 professionals worldwide.

Marc N. Casper, president and CEO of Thermo Fisher, commented:

Patheon’s development and manufacturing capabilities are an excellent complement to our industry-leading offering for the biopharma market. Our combined capabilities will enhance our unique value proposition for these customers, create significant value for our shareholders and further accelerate our company’s growth.

James C. Mullen, CEO of Patheon, added:

Over the past several years, we have increased our capabilities to become a leading CDMO provider in a highly fragmented market. We are confident that our combined offerings and Thermo Fisher’s proven track record of disciplined M&A and successful integrations will take our business to the next level.

Shares of Pantheon were last seen up 33% at $34.60 on Monday, with a consensus analyst price target of $30.65 and a 52-week trading range of $23.72 to $34.64.

Thermo Fisher traded up 0.6% to $172.47. The 52-week range is $139.07 to $173.53, and the consensus price target is $183.75.