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Thermo Fisher Scientific Agrees to Buy PPD for $17.4 Billion

Thermo Fisher Scientific is buying healthcare testing company PPD for $17.4 billion in cash, plus the assumption of $3.5 billion in debt.

Thermo Fisher Scientific  (TMO) - Get Thermo Fisher Scientific Inc Report on Thursday said it has agreed to acquire healthcare testing company PPD  (PPD)  for $17.4 billion in cash, creating one of the biggest drug-testing companies in the U.S.

Under terms of the deal, Thermo Fisher Scientific will pay PPD shareholders $47.50 a share for a total cash purchase price of $17.4 billion plus the assumption of approximately $3.5 billion of debt. 

The amount represents a premium of approximately 24% to PPD's closing price as of Tuesday, April 13. Upon close of the transaction, PPD will become part of Thermo Fisher's Laboratory Products and Services Segment, the companies said.

The deal marks the latest merger among companies that run clinical trials and provide other services for drugmakers - an area that has exploded since the coronavirus pandemic amid surging demand for drug-testing capabilities, specifically related to COVID-19.

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Wilmington, N.C.-based PPD is a so-called contract-research organization, or CRO, a type of company that runs the studies testing experimental drugs developed by pharmaceutical companies. PPD also provides laboratory services.

While hurt in the early days of the pandemic, CROs have seen a surge in activity, augmented by drugmaker- and government-funded studies testing COVID-19 drugs and vaccines. The industry also is poised to benefit from treatments and preventive measures for any future pandemics.

Thermo Fisher Scientific saw specialty-diagnostics revenue grow 109% to $1.97 billion in its most recent quarter, beating expectations of $1.48 billion.

PPD was taken public by investors Carlyle Group and Hellman & Friedman in February 2020. The two private equity firms are still its largest shareholders, holding 38% and 16% of the stock respectively, according to data compiled by Bloomberg.

At last check, shares of PPD were up 7.06% at $47.44, while shares of Thermo Fisher Scientific were up 3.07% at $492.51. Thermo Fisher shares have nearly doubled from their 52-week low of above $250 set in late March 2020.