Merger creates new force in life sciences

The combined company will be called Fisher Scientific International and will have annual sales of around $5.7 billion, spanning research and drug discovery, biopharmaceutical production, diagnostics, and a $1.1 billion offering in life sciences. Apogent and Fisher have in fact had a close relationship for years, with Apogent supplying Fisher with many of the laboratory supplies that it sells.

The deal is the latest in a growth by acquisition spree that has seen Fisher absorb microbiology group Oxoid and nucleic acid specialist Dharmacon this year for $410 million, and Perbio in 2003 for more than $700 million.

In the process, it has shifted its business model from one of being mainly a distributor of other companies' products to one that makes 40 per cent of its own range. Adding in Apogent will raise that proportion to around 60 per cent, said the company.

The aim of all the deals has been to expand Fisher's product range into new, higher-margin areas, said chief executive Paul Montrone in a conference call. Operating margins will increase and be in the range of 10.5-10.7 per cent in 2004 and 13.3 -13.5 per cent in 2005, he added.

Fisher said it expects 2004 revenue growth of 27.5-29.5 per cent. The company had forecast a revenue rise of 13.5-15.5 per cent at the time of the Oxoid and Dharmacon acquisitions. Cost saving will be about $55 million in 2005, rising to $100 million in 2006.

Under the terms of the merger agreement, Apogent shareholders will receive 0.56 shares of Fisher common stock for each share of Apogent common stock they own. The companies anticipate that the transaction, which includes the assumption of around $1 billion in debt - will be completed early in the third quarter of 2004.