Is Thermo Fisher Overpaying for Affymetrix?

Health and Healthcare

Published: January 11, 2016 9:05 am

Last Updated: January 13, 2020 3:12 pm

Affymetrix Inc. (NASDAQ: AFFX) was absolutely soaring early on Monday on word that it will be acquired. Thermo Fisher Scientific Inc. (NYSE: TMO) is making the acquisition, to the tune of roughly $1.3 billion, or $14.00 per share. Both boards of directors unanimously approved the transaction, but it is still subject to the approval of Affymetrix shareholders and regulators.

The transaction is expected to be completed in the second quarter of 2016.

Affymetrix has roughly 1,100 employees worldwide and maintains sales and distribution operations primarily in the United States, Europe and Asia. The company has annual revenues of $350 million, and analysts don’t expect this to change much for 2015 and 2016.

Thermo Fisher expects to realize total synergies of approximately $70 million by year three following the close, consisting of approximately $55 million of cost synergies and approximately $15 million of adjusted operating income benefit from revenue-related synergies.

Ultimately, Thermo Fisher expects a few benefits from this transaction:

Significantly expands antibody portfolio to strengthen leadership in biosciences.
Adds genetic analysis capabilities serving clinical and applied markets.
Offers opportunity to leverage commercial and geographic scale.
Creates attractive financial benefits, adding $0.10 in earnings per share (EPS) in the first full year.