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Next up on Thermo Fisher's to-do list? Some serious M&A: Analyst

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Thermo Fisher Scientific's Waltham, MA headquarters--Courtesy of Coolcaesar, Creative Commons CC-BY SA 3.0

Thermo Fisher Scientific ($TMO) is no stranger to M&A. The company in the past few years has struck a series of deals to beef up in diagnostics, including its $13.6 billion pact for DNA sequencing giant Life Technologies. Now Thermo Fisher could be revving up its dealmaking engine again, one analyst says.

Thermo Fisher recently filed a mixed securities shelf registration for "general corporate purposes" that "may include the acquisition of companies and businesses," the company said in its filing. The shelf could augur a bigger deal in Thermo Fisher's pipeline, JPMorgan analyst Tycho Peterson said in a report last week, especially as med tech rivals such as Danaher ($DHR) and Agilent ($A) continue to snatch up businesses, Bloomberg reports.

Even though Thermo Fisher has a dealmaking track record, nailing down its next target could be difficult. Many potential candidates are either too expensive or too small, or come with risky technology or antitrust hurdles, Bloomberg Intelligence analyst Jonathan Palmer told the news outlet. "Thermo Fisher is looking at deals at all times. But finding a compelling asset is easier said than done," Palmer said.

If and when Thermo Fisher decides to embark on a deal, a number of companies could be on its shortlist. Dutch diagnostics giant Qiagen ($QGEN), which is valued at $5.1 billion, could be an attractive buy. The company's Dutch domicile would offer Waltham, MA-based Thermo Fisher a tax-friendly haven. But new federal rules discouraging tax inversions could make this kind of a deal less attractive.

Cepheid ($CPHD) and Myriad Genetics ($MYGN) could also end up on Thermo Fisher's M&A platter. But Cepheid with a market value of $2.3 billion is not too palatable given its money-bleeding past and expensive valuation. Myriad, which has a market value of $2.6 billion, is also expensive and may be too small to support Thermo Fisher's grand ambitions.

Thermo Fisher could also turn to local companies Waters ($WAT) and PerkinElmer ($PKI), whose values ring in at $10 billion and $5.3 billion, respectively. But PerkinElmer is always a bridesmaid, never a bride when it comes to M&A, Bloomberg points out. And regulators might push back at a deal between Thermo Fisher and Waters.

If Thermo Fisher wanted to set its sights high, it could try for a deal for sequencing giant Illumina ($ILMN). The company has a good track record and recently unveiled a liquid biopsy spinoff to cash in on the rapidly growing market.

But Illumina has rejected potential advances before. In 2012, the company spurned Roche's ($RHHBY) hostile bid, with Illumina and shareholders saying that the offer price on the deal was too low.

Meanwhile, Thermo is staying busy in the M&A space. In 2014, the company wrapped up its deal for Life Technologies, which gave it a strong foundation in DNA sequencing. Last year, the company snatched up bioprocessing provider Advanced Scientific (ASI) for $300 million in cash, getting its hands on the latter's bioproduction business.

Earlier this year, Thermo Fisher said it would shell out $1.3 billion for Santa Clara, CA-based Affymetrix ($AFFY). The deal was meant to give Thermo Fisher a boost in drug research and genetic analysis, two areas it's targeting for growth.

- here's Thermo Fisher's filing (PDF)
- read the Bloomberg story

Special Reports: Med tech M&A gets much, much bigger during the first half - Thermo Fisher bought Life Technologies | The top 10 med tech M&A deals of 2013 - Thermo Fisher and Life Technologies

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