To be clear from the outset, I'm a fan of Thermo Fisher Scientific Inc. (NYSE: TMO ) , and I believe the company's impending acquisition of Life Technologies Corp. (NASDAQ: LIFE )
will be a transformative deal for a company with a long history of
strong M&A moves. With this deal, Thermo Fisher will operate on a
scale that the likes of VWR, Merck KGaA, Agilent, and Waters cannot match, and the company will have the resources to challenge companies like Illumina (NASDAQ: ILMN ) , Becton Dickinson, and Danaher in their growth markets to the extent management wishes to invest.
The question is price. This has been a good year for anything "bio",
but Themo Fisher has outperformed almost everybody else in the sector
with a 70% jump in the last twelve months. Even with a double-digit
multiple to EBITDA and/or strong long-term mid-single digit free cash
flow growth, it is hard to call these shares a bargain. Thermo Fisher
has a good history of drawing more value than expected from its M&A
transactions, but that seems to be the base case assumption here rather
than the upside.
Please read the full article at The Motley Fool:
http://www.fool.com/investing/general/2013/12/26/thermo-fisher-scientific-may-be-hard-pressed-to-ou.aspx
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