Clarification of Millipore and Thermo Fisher (MIL, TMO, PLL)

It was just a while ago that Millipore Corp. (NYSE: MIL) exploded upwards and Thermo Fisher Scientific Inc. (NYSE: TMO) saw a significant drop.  The reason was a “merger agreement” being cited, but Bloomberg clarified this as Thermo Fisher making an unsolicited takeover offer for about $6 billion.  It was classified as “according to a person close to the situation.”  Also noted was that Millipore had hired Goldman Sachs.

There are some serious caveats here in this situation.  And until a formal deal is announced it needs to be considered either a rumor or hearsay.

What is interesting here is that this deal leak is one of those instances which may not come to fruition under how it was described or the exact deal may be grossly exaggerated in terms.  A $6 billion price tag of close to $108.00.  Just one problem… When firms report a deal size, this often implies an enterprise value of the combined debt and equity or it includes the size from the buyer as being the stock price plus any added debt taken on to finance the transaction.

For whatever it is worth, Millipore had never really been above $80.00 per share or at least for very long.  Because it is in the filtration business, water business, and life sciences business, this company has been thought of as a potential takeover target in the past.

CNBC’s David Faber just reported that Millipore has been in the process of auctioning itself off.  Faber also just noted that the price does likely include debt.

The related stock that would be one of the last men standing in the sector is Pall Corp. (NYSE: PLL).  Its shares are up 4% at $38.62 and shares hit a 52-week high of $39.13.  It too has been considered as a potential takeover target in years past.

Millipore is up 26% at $90.17 and Thermo Fisher is down 5.5% at $46.53.  Based on current market caps after the change, Thermo Fisher is still almost 4-times the size of Millipore.

This deal may come.  It may come in parts.  And it may not reach the described amount today.  But the deal leak will at a minimum just have driven up the cost to play in the M&A poker game.

JON C. OGG