Quest will pay $740 million for neurology testing firm Athena, while Eurofins gains contract testing capabilities.
Thermo Fisher Scientific is to sell its Athena Diagnostics business to Quest Diagnostics for $740 million, and its Lancaster Laboratories operation to Eurofins Scientific for another $200 million. Thermo says it expects both transactions to be finalized during the second quarter of this year. Sale of the Lancaster Laboratories contract-testing business to Eurofins is subject to a post-closing adjustment.
Announcement of the divestitures comes just a couple of months after Thermo reported it was buying chromatography systems firm Dionex for $2.1 billion in cash. This deal is expected to complete during the first quarter of this year.
Reference laboratory Athena Diagnostics offers diagnostic testing, particularly genetic testing, for neurological and other diseases. The firm’s expertise includes tests for peripheral nerve and neurogenetic disorders, Alzheimer disease, paraneoplastic syndromes, movement disorders, neuromuscular disorders, and ataxia. Thermo says Athena achieved revenues of some $110 million in 2010.
Lancaster Laboratories is a contract-testing organization providing analytical services in the pharmaceutical, biopharma, and environmental science fields. The business made $115 million in revenues during 2010.
“Athena and Lancaster have performed very well within our company and we believe that these strategic buyers will offer them even greater opportunities for growth in the long term,” remarks Marc N. Casper, Thermo’s president and CEO. “The transactions position both businesses in companies that are closely aligned with the unique contract laboratory services they provide and, at the same time, will generate significant proceeds that we can redeploy to create shareholder value.”
Thermo has in addition authorized a new $750 million share repurchase program, which expires February 22, 2012. The firm has an existing share repurchase authorization in progress, which still has some $385 million remaining, and which expires in September 2011.
Athena’s prospective new parent, laboratory-testing services specialist Quest, will pay for its acquisition using cash at hand and existing credit facilities. It says Athena will bring expertise in neurology to complement its capabilities in testing for cancer, infectious disease, and cardiovascular disease. Assuming the transaction closes early in the second quarter of 2011, Athena is expected to add approximately 1% to Quest’s 2011 revenue growth. Quest reported revenues of some $7.4 billion in 2010.
“The acquisition of Athena Diagnostics, the premier provider of esoteric and genetic testing for neurology, will establish Quest Diagnostics as the clear leader in this rapidly emerging market, which represents one of the next significant growth areas in diagnostic testing,” said Surya N. Mohapatra, Ph.D., chairman and CEO of Quest Diagnostics. “Strategically, we believe Athena will be the principal beneficiary of the accelerated demand for diagnostic testing as new and earlier therapies are developed for neurological conditions such as Alzheimer’s disease.”
Eurofins, meanwhile, is an international group of laboratories providing testing and support services to the pharmaceutical, food, environmental, and consumer products businesses and governments. The group makes about $900 million in annual revenues. It says the acquisition of Lancaster will provide a bolt-on business that will significantly enlarge its North American footprint.