NEW YORK (TheStreet) -- It is not often that a big company buys units from a smaller company in order to solve the smaller company's antitrust woes. (Usually it's the reverse: a big company sheds units to satisfy antitrust regulators.) But that's the story behind General Electric (GE) agreeing to buy some pieces of Thermo Fisher Scientific (TMO), as reported by The Deal. And it seems like all parties will benefit.
Specifically, GE is buying Thermo Fisher's cell culture, gene modulation and magnetic beads businesses, including its HyClone cell culture media unit, for about $1.06 billion. TMO shares are down to around $110 and are down 1.4% for the year to date. GE shares are down slightly to $27.32 and are off 2.5% for the year to date.
Thermo Fisher has mainly been growing through acquisitions in recent years. Its independent chairman of the board is Jim Manzi, who heads Stonegate Capital, a private equity firm. Savvy readers with good memories may recall Manzi's past life as CEO of Lotus Development Corp., the software firm acquired by IBM (IBM) in 1995.
The sale was the price Thermo Fisher was told to pay by the European Commission in exchange for its approval last November of its $13.6 billion acquisition of Life Technologies (LIFE). The businesses being sold have sales of about $250 million, a drop in the bucket next to Thermo Fisher's 2012 sales of $12.5 billion.
The problem for the Europeans was that, with Life added to it, Thermo Fisher would have had nearly half the market in cell culture materials.
Life Technologies had sales of almost $3.8 billion in 2012. Combined, Thermo Fisher and Life should thus report sales of about $17 billion for 2013. That's still tiny next to GE's annual sales of almost $145 billion last year. But within their niche they're powerful. Life also has an e-commerce business that could create synergies for the rest of Thermo Fisher's products.
But this is about health care, not a conglomerate. How do Thermo Fisher and GE Healthcare stack up to one another?