UPDATE 5-Thermo Fisher to buy Dionex for $2.1 billion

* Dionex holders to get $118.50/share, a 21 pct premium

* Deal helps Thermo expand in Asia, environmental safety

* Thermo shares up 4.1 pct, Dionex shares rise to $117.92
(Adds fund manager comment in paragraph 9, updates shares)

By Lewis Krauskopf and Bill Berkrot

NEW YORK, Dec 13 (BestGrowthStock) – Thermo Fisher Scientific Inc
(TMO.N: ), the world’s largest maker of scientific instruments,
said it would buy Dionex Corp (DNEX.O: ) for $2.1 billion to
broaden its lab equipment and environmental safety offerings
and boost its presence in Asia.

Dionex is the world’s third-biggest player in
chromatography systems, used in analysis for everything from
drug compounds to water quality and food contaminants.

Thermo is already a major player in such analytical
technologies. Its sales in that segment jumped 14 percent in
its latest quarterly report.

The deal enhances Thermo’s expansion into the growing areas
of food and environmental safety, with huge potential in
China.

“It takes that technology that Dionex has and now exposes
it to the full scale of Thermo Fisher’s reach,” said Quintin
Lai, an analyst with Robert W. Baird. “This is one of the areas
where it (Thermo) does not have much exposure.”

Dionex shareholders will receive $118.50 per share in cash,
representing a 21 percent premium over Friday’s closing price,
according to the deal announcement on Monday. Dionex shares
climbed to $117.92 in Nasdaq trading.

Thermo shares rose 4.1 percent as the deal, unanimously
approved by both boards, is expected to boost profits
immediately after closing.

The deal continues the trend of consolidation in the
fragmented life-sciences tools space. Analysts see additional
mergers on the horizon, led by Thermo and rivals such as Life
Technologies Corp (LIFE.O: ) and Danaher Corp (DHR.N: ).

“These businesses have the potential to acquire,
significantly reduce operating expenses, and use a massive
economy of scale to leverage the sales potential of the
acquired products, which come from different attractive
niches,” said Michael Gregory, portfolio manager of the
Highland Long/Short Healthcare Fund, which holds Dionex
shares.

Thermo, itself a product of a large merger, is the biggest
player in the life sciences space and reported revenue of $10.1
billion last year.

Dionex is based in Sunnyvale, California and has more than
1,600 employees. It introduced the first ion chromatography
system for water analysis shortly after its founding in 1975.

“The combined company has the most extensive chromatography
offering, which is the largest category of scientific
instruments from a market perspective,” Thermo Fisher Chief
Executive Marc Casper said in a telephone interview.

IMPORTANCE OF ASIA

Dionex generates more than 35 percent of its revenue in
Asia-Pacific and other emerging markets. It reported nearly
$420 million in sales for its most recent fiscal year.

“We’ve talked consistently for quite some time about the
importance of Asia and we’ve taken a number of actions to
strengthen the company’s position in Asia,” Casper said.
“Adding Dionex to Thermo Fisher was a nice step forward in
building out our commercial presence into that market.”

He said Dionex would help Thermo address China’s enormous
environmental problems with air, water and food safety.

“There’s a lot of water testing and environmental testing
going on and Dionex is really very present in those
laboratories, and that’s a good opportunity to accelerate the
combined companies’ growth,” Casper said.

Thermo expects the deal to increase its adjusted earnings
per share by 13 cents to 15 cents in the first 12 months after
closing, which is projected for the first quarter of 2011.
Thermo is expected to post earnings of $4.00 per share next
year, according to Thomson Reuters I/B/E/S.

Thermo expects $60 million in cost savings and other merger
benefits in the third year after closing the Dionex deal.

Earlier this year, Thermo lost out to German-based Merck
KGaA (MRCG.DE: ) in a bid to buy Millipore Corp and its
biotechnology production business. Merck bought Millipore for
$6 billion. [ID:nLDE62007S]

At the time, analysts said Thermo would continue to hunt
for deals, though not necessarily those the size of Millipore.
[ID:nN31158795]

Casper said Thermo would look for more acquisition
opportunities but does not feel compelled make deals, saying it
does not need deals to drive organic growth or meet its growth
targets.

Barclays Capital and J.P. Morgan Securities LLC are
Thermo’s financial advisers, while its legal counsel is
Wachtell, Lipton, Rosen & Katz. Goldman Sachs and Cooley LLP
are advising Dionex.
(Reporting by Lewis Krauskopf; Editing by Michele Gershberg,
Lisa Von Ahn, John Wallace, Dave Zimmerman)

UPDATE 5-Thermo Fisher to buy Dionex for $2.1 billion