May 8 (Bloomberg) -- Thermo Electron Corp., the world's biggest medical-laboratory instrument maker, agreed to buy Fisher Scientific International Inc. for $10.6 billion to become the largest supplier of lab equipment from beakers to sterilizers.
Fisher investors will get 2 Thermo shares, or $78.90, for each of their shares, about 7 percent more than the Hampton, New Hampshire-based company's closing price last week, Waltham, Massachusetts-based Thermo said in a Business Wire statement today. Fisher investors will own about 61 percent of the company.
Thermo is seeking to acquire a company twice its size to branch out into the emerging market for genetic tests and personalized health care and fill growing demand for medical instruments. Thermo had $2.63 billion in sales last year, compared with Fisher's $5.58 billion.
The combination will bring $150 million in cutting administrative, manufacturing and distribution costs, the companies said.
Shares of Fisher jumped 1.68 euros, or 3 percent, to 58.28 euros ($74.41) in Germany after closing at $73.73 last week in New York Stock Exchange composite trading. Thermo shares were poised to fall in Germany after closing at $39.45 in New York last week.
Both companies have been expanding through acquisitions. Thermo spent $1 billion to buy companies last year, including the purchase of Kendro Laboratory Products for $833.5 million. Fisher in March agreed to buy closely held Athena Diagnostics Inc. and a stake in Nanogen Inc. for around $300 million to expand diagnostic services.
First-quarter profit at Thermo fell 4 percent on higher costs, including the expensing of stock options. Sales rose 2 percent to $684.3 million on increased demand for its life and laboratory science product offerings. The company raised its full-year profit forecast in April to $1.73 a share from $1.68.
Fisher said earlier this month that it expects sales to grow between 6 percent and 8 percent this year and is targeting earnings per share between $4.05 and $4.20.
Thermo shares have gained 31 percent this year, while shares of Fisher have added 19 percent.
Thermo Chief Executive Officer Marijn E. Dekkers will head the new company, with Paul Meister, Fisher's vice chairman, will be chairman of the combined company.
Demand for medical instruments is rising in Asia and India, where development by generic-drug makers is rising.
Thermo was advised by Lehman Brothers and Rothschild Inc., with Wachtell, Lipton, Rosen & Katz acting as legal counsel. Goldman, Sachs & Co. and Lazard Freres & Co. advised Fisher, with Skadden, Arps, Slate, Meagher & Flom LLP giving legal advice.
Newspapers including Wall Street Journal and The New York Times reported earlier today that the companies were close to a deal, citing unidentified people familiar with the situation.
