Thermo Fisher Scientific, the Waltham laboratory equipment maker with the biggest market value of any Massachusetts company, said Thursday that it’s paying $17.4 billion for a North Carolina company that helps drug makers run clinical trials.
The cash deal to acquire PPD marks the latest merger involving companies that run trials and provide other services to the pharmaceutical industry. Although such “contract research organizations” lost business early in the pandemic, when many trials were put on hold, the industry has regained its footing, in part because of the testing of experimental COVID-19 vaccines and treatments.
“The acquisition of PPD is a natural extension for Thermo Fisher,” Marc N. Casper, chairman and chief executive, said in a statement. Pharmaceutical and biotechnology companies are Thermo Fisher’s biggest customers, he said, and the acquisition will enable it to help drug makers move experimental medicines faster from the laboratory bench to regulatory approval.
Thermo Fisher will be able to bolster its business by integrating PPD’s drug-development platform, patient recruitment work, and lab services, the company said.
David Simmons, chairman and chief executive of Wilmington, N.C.-based PPD, called Thermo Fisher “a world-class company with a very similar culture and values.”
The boards of directors of both businesses approved an agreement in which Thermo Fisher will acquire PPD for $47.50 a share, for a total cash purchase of $17.4 billion, plus the assumption of about $3.5 billion of debt. This represents a premium of about 24 percent to the closing price of PPD’s stock on the Nasdaq Tuesday.
Thermo Fisher’s share price rose more than 3.4 percent Thursday, closing at $494.38. PPD’s stock increased 6.5 percent, to $45.80.
The acquisition is Thermo Fisher’s largest to date. It tops the $13.6 billion purchase of the diagnostics firm Life Technologies in 2013 and the $10.6 billion deal in 2006 that originally formed the company through the merger of Thermo Electron and Fisher Scientific International.
Thermo Fisher, which has a market value of nearly $195 billion, has made a series of multibillion-dollar deals in recent years, acquiring companies that make substances used in chemical reactions, electron microscopes, software, and other products and services.
Two years ago, the company moved into the fast-growing field of gene therapy, buying Brammer Bio of Cambridge for about $1.7 billion. Brammer Bio makes viral vectors used to deliver genetic material into defective cells in the hopes of treating or even curing inherited disorders.
But last year a big potential acquisition fell through. A bid for the diagnostics and testing company Qiagen, valued at $11.5 billion when the deal was announced in March 2020, ended in August after the two sides failed to agree on the price.
PPD provides a broad range of clinical research and laboratory services to drug companies that test experimental medicines on volunteers. It has at least 26,000 employees who work in nearly 50 countries. PPD will become part of Thermo Fisher’s laboratory products and services division.
Thermo Fisher has more than 80,000 employees worldwide, about half of whom work in the United States, with over 3,000 in Massachusetts. As a leading producer of laboratory hardware, diagnostic test kits, and other supplies, it has played a significant role in efforts to tame the COVID-19 pandemic.
Among various pandemic response efforts, the company saw a spike in demand for its ultra-cold freezers, which can be used to store the Pfizer-BioNTech vaccine, the first cleared for use in the United States. It was also one of the first life-sciences companies in Massachusetts to begin developing coronavirus test kits. Earlier this week, the Food and Drug Administration granted Thermo Fisher emergency use authorization for an automated system for coronavirus testing that can “process up to 8,000 samples in a single day with minimal staffing,” according to a press release.
Thermo Fisher is the biggest public company based in Massachusetts, with a market value that surpasses both General Electric and Raytheon Technologies by roughly $70 billion. Last year, Thermo Fisher’s revenue grew 26 percent to $32.22 billion.