Thermo Fisher Scientific Inc., the world’s largest maker of laboratory instruments, agreed to acquire Dionex Corp. for about $2.1 billion to expand in the water-analysis business in China.
The $118.50-a-share price represents a premium of 21 percent over the closing value of Dionex on Dec. 10, the last trading day before the announcement. The transaction will be completed in next year’s first quarter, the companies said in a statement today.
Dionex, based in Sunnyvale, California, produces products used to identify chemical mixtures, and made the first ion-chromatography system for water analysis. Dionex will increase Thermo Fisher’s business in China, where there is demand for measuring water quality, the companies said.
“Thermo has a strong cash flow and a strong balance sheet, and investors were eager to see Thermo do a sizable acquisition,” said Sung Ji Nam, an analyst at Gleacher & Co. in New York, in a telephone interview. “There’s very little overlap between” the companies’ products, he said.
Dionex jumped $19.66, or 20 percent, to $117.83 at 4 p.m. New York time in Nasdaq Stock Market composite trading. Thermo Fisher, based in Waltham, Massachusetts, rose $2.52, or 4.8 percent, to $55.56 in New York Stock Exchange composite trading.
“This is a natural fit with our range of products and services, and Dionex has a great presence in China,” Marc Casper, chief executive officer of Thermo Fisher, said in an interview. The acquisition will add 13 cents to 15 cents a share to Thermo Fisher’s adjusted earnings in the first 12 months after closing, he said.
Dionex’s chromatography instruments are used to detect what’s in a sample of water and will expand the range of products offered by Thermo Fisher, which makes instruments for mass spectrometry, another way of screening liquids and foods for contaminants. The instruments also have applications in discovering drugs.
Thermo Fisher has announced 29 pending or completed acquisitions in the past five years, with an average premium of 18 percent and an average value of $1.28 billion. The biggest was the purchase of Fisher Scientific for about $11 billion in 2006, according to Bloomberg data. Thermo had about $930 million in cash on Sept. 30.
Dionex, founded in 1975, generates more than 35 percent of its revenue from the Asia-Pacific region, according to the companies’ statement. Dionex, with more than 1,600 employees in 21 countries, is to become part of Thermo Fisher’s Analytical Technologies Segment.
Barclays Capital and J.P. Morgan Securities advised Thermo Fisher, and Goldman Sachs was Dionex’s adviser.