Thermo Fisher Scientific is in the process of acquiring Wilmington-based PPD in a deal valued at $17.4 billion, with the approval of both company boards of directors. The deal will expand Thermo Fisher’s footprint in North Carolina, as it had already planned to add 500 new jobs in Greenville during the next two years, as the Waltham, Mass. based company expands its sterile drug product development and commercial manufacturing capabilities in North Carolina.
“The clinical research services industry is an attractive, high-growth industry, and this acquisition establishes us as a global leader,” said Thermo Fisher chairman, president, and CEO Marc Casper in a conference call this week, describing the acquisition as one that will strengthen the company’s position as a market leader and its revenue, according to a forecast shared by Thermo Fisher describing the deal.
Once the deal closes, PPD and its 26,000 employees will become a part of Thermo Fisher’s Laboratory Products and Services Segment, the company said.
“The business has a strong backlog of work ahead of it that bodes well for quite some time in terms of activity and growth,” said Casper. “When you think about what we’re doing here is we’re taking this business, we’re making it part of Thermo Fisher Scientific. But for day in and day out, it’s going to be exactly the same for the colleagues.”
“PPD has done a nice job of scaling the organization. Obviously, Thermo Fisher also has a lot of experience about scaling from a talent perspective,” said Casper. “You think about we had roughly 10,000 people last year during the pandemic to respond to the pandemic and we have great talent capabilities as well. And the combined company should do a great job of continuing to grow a very strong talent base.”
The acquisition is not meant to gain efficiency through merging workforces, then reducing the total employee base, said Casper on the call. The goal of the acquisition is to accelerate growth, he said, noting that the financial forecast conducted as a part of determining the deal demonstrates a significant increase in company revenue by the third year following the acquisition.
“I feel good about the synergies and I want all of our colleagues to just be excited about what the future holds and not to be distracted by a big number, but rather to say I get what we’re doing and for me, it’s business as usual,” said Casper.
PPD built a high-performing team under the leadership of David Simmons, said Casper, and the company plans to keep the team intact.
“The colleagues that are delivering the work day in and day out at PPD, their jobs going to be exactly as it is today, right, post close. There’s not an integration with job change or those things. Just do a great job serving customers,” said Casper. “Over time, together, we’ll be able to have even more compelling offering for the customers and that’s a super cool opportunity for all of us to participating in and using the vernacular that PPD is about bending the time and cost curves for bringing out medicines.”
Thermo Fisher will also assume $3.5 billion in net debt, according to the terms of the deal. PPD generated $4.7 billion in revenue in 2020, and possessed a 15 percent adjusted operating margin, according to Casper, the acquisition of the company will help Thermo Fisher expand capabilities for the phase in between assessing safety and efficacy and healthcare outcomes.