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Thermo Fisher (TMO) to Divest Cole-Parmer to GTCR for $480M

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Thermo Fisher Scientific (TMO - Free Report) recently inked a definitive agreement with private equity firm GTCR, LLC whereby the latter has agreed to buy the Cole-Parmer channel business of Thermo Fisher for a deal value of $480 million. Thermo Fisher expects the deal, which is likely to be closed in the third quarter, to have immaterial impact on the company’s 2014 adjusted earnings per share (EPS).

The company will provide an updated annual guidance for 2014 during its second quarter earnings release which is slated to be released before the opening bell on Jul 23.

However, for the second quarter, Thermo Fisher had earlier assumed to post an EPS lower than the street number. This, according to the company, is because of some seasonal impact in the said quarter as salary increases have been affected during the period. This may have an impact on the quarterly bottom line.

Based in Illinois, Cole-Parmer is a part of Thermo Fisher’s Laboratory Products and Services Segment. This business provides fluid handling, test and measurement, and electrochemistry products and services. This business generated a significant $230 million in revenues during the last fiscal.

The sellout decision is consistent with Thermo Fisher’s strategy to focus on its core segment. With the successful completion of the Life Technologies’ takeover, the company is currently emphasizing on research, Specialty Diagnostics and applied markets. In addition, the company is currently working on the growth opportunities in Asia Pacific and emerging markets.

Earlier in March, to fulfill the closing conditions related to the Life Technology acquisition, Thermo Fisher divested 3 of its business divisions to GE Healthcare, a unit of General Electric Co. (GE - Free Report) . Per the deal, GE Healthcare bought Thermo Fisher’s gene modulation, cell culture and magnetic beads businesses for about $1.06 billion.

Thermo Fisher currently carries a Zacks Rank #4 (Sell).

Other Stocks to Consider

While we choose to avoid Thermo Fisher at the moment, investors interested in the medical instrument sector can consider stocks like Accuray Inc. (ARAY - Free Report) and Masimo Corp. (MASI - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy).

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