Thermo nabs Chinese approval for its $13.6B Life Tech merger
Thermo Fisher ($TMO) has cleared yet another hurdle in its bid to buy Life Technologies ($LIFE) for $13.6 billion, with news today that China's Commerce Ministry has signed off on the deal, according to Reuters. There are some conditions, however: Thermo must lower the cost of two products sold in China, offload its cell culture and gene adjustment units and sell its 51% ownership of China's Lanzhou National Hyclone Bio-engineering.
Thermo is already well on its way to meeting those conditions. Earlier this month, Thermo sold its gene modulation, cell culture and magnetic beads segments to GE Healthcare ($GE) for $1.1 billion. That deal came just two months after the European Commission said it would only approve the Life Tech acquisition if Thermo sold off a few business units. The three businesses brought in about $250 million in revenue last year, according to Thermo.
As for the other conditions of the Chinese approval, Thermo is being asked to reduce the prices of two products related to protein processing and genetic sequencing, according to GenomeWeb. A spokesperson for Thermo told GenomeWeb that the Chinese Ministry's conditions "pertain to businesses with immaterial revenue."
The Chinese signoff on the Life Tech deal is more than just a formality for Thermo, which has been expanding its presence in the country. Last year, Thermo committed $9.5 million to the construction of an R&D center in Shanghai, where it plans to develop new technologies for the Chinese market. Much of the 40,000-square-foot China Innovation Center will be devoted to biology labs. In 2012, Thermo poured $20 million into a Suzhou manufacturing facility.
China has been good for Thermo's bottom line, too. In the third quarter ending last September, the company recorded $317.6 million in profits on record net revenues of $3.2 billion--results it partly attributed to double-digit growth in China.
Thermo expects to close the Life merger early this year, pending U.S. regulatory approval. CEO Marc Casper has estimated the deal will bring 30% annual revenue growth and save the combined company about $275 million in expenses by year three.