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Thermo Fisher to Buy Gatan, Boost Electron Microscopy Suite

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Thermo Fisher Scientific Inc. (TMO - Free Report) recently announced signing an agreement to buy Gatan, Inc — a wholly-owned subsidiary of Roper Technologies, Inc (ROP - Free Report) . The company has agreed to pay around $925 million in cash for the buyout. The transaction is expected to be completed by the end of 2018 and is subject to certain customary closing conditions.

A Glimpse at Gatan

Gatan is a leading manufacturer as well as supplier of instrumentation and software to the electron microscopy industry. Its technologies are utilized in electronics, life sciences and materials science to enable electron microscopy workflows. Further, the subsidiary is expected to generate revenues of about $150 million in 2018.

Thermo Fisher plans to integrate Gatan’s technologies in the Analytical Instruments business. Further, the company aims at building an integrated system that consistently connect microscope hardware, software and accessories by combining Gatan’s technologies with its electron microscopy portfolio.

Strategic Buyouts — Major Growth Driver

As part of its strategy to effectively deploy capital, Thermo Fisher has undertaken several acquisitions in the recent past. Along with boosting revenue accretion, these deals have historically benefited the company’s operating margin and resulted in tax synergies.  Notably, the Patheon buyout has substantially added an impetus to the company’s value proposition for biopharma customers. Further, it has already started to prove accretive to the Laboratory Products and Services segment.

Another recent development is the company’s takeover of Affymetrix, which works on multiplex and simultaneous analysis of biological systems at the cell, protein and gene level. It facilitates the transition of research tools into clinical and applied markets and has started to boost Thermo Fisher’s offering in the fast-growing flow cytometry market through an advanced antibody portfolio.

We also take into consideration other strategic acquisitions by Thermo Fisher. The company completed the buyout of desktop scanning electron microscopy (SEM) solutions provider, Phenom-World. Financial terms of this transaction remain undisclosed.  Further, Thermo Fisher announced the buyout of IntegenX Inc to broaden the human identification (HID) portfolio, 

Market Potential

Per a report published on Financial Reporting, the global market of electron microscopes is expected to see a CAGR of 6.4% between 2017 and 2026. Considering the bountiful opportunities in this niche, the company’s latest development seems to be strategically aligned.

Price Performance

Over the past year, Thermo Fisher’s shares have outperformed its industry . The stock has gained 17.8% against the industry’s 4% fall.

 

Zacks Rank & Key Picks

Thermo Fisher carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are Genomic Health (GHDX - Free Report) and Abiomed (ABMD - Free Report) .

Genomic Health has an expected earnings growth rate of 187.5% for the current quarter. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Abiomed has a projected long-term earnings growth rate of 27% and a Zacks Rank of 1.

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