Bloomberg News

Thermo Fisher Will Pay Down Debt Before Deals, CEO Says

February 15, 2012

(Updates with interest rate on note in fourth paragraph.)

Feb. 15 (Bloomberg) -- Thermo Fisher Scientific Inc., the largest maker of laboratory instruments, will use cash this year to pay down its $7 billion in debt rather than make further large acquisitions, Chief Executive Officer Marc Casper said.

“Our cash will remain relatively stable, but we’ll reduce debt a little bit,” Casper said in a telephone interview. “That’s the starting assumption.”

Thermo Fisher made five acquisitions in 2011, including its $3.5 billion acquisition of Phadia AB and $2.1 billion purchase of Dionex Corp. While the Waltham, Massachusetts-based company continues to have an appetite for deals, Casper said he’s doesn’t see larger transactions happening “any time soon.”

Thermo Fisher has a $1 billion bank debt coming due June 22, 2012, and a $350 million senior note at 2.15 percent coming due Dec. 28, 2012. The instrument-maker has a share repurchase program pace of about $750 million a year, about half of its cash flow, Casper said.

Laboratory budgets are going to be increasing as new construction is spurred by an increased focus on quality assurance, he predicted. Thermo Fisher also is benefiting from some of its specialty diagnostics products, such as greater sales of its allergy tests, he said.

While the economy is struggling, Casper said research funding and academic funding is relatively well protected in Europe. In the U.S., spending by research institutions in the fourth quarter was better than the third quarter, he said.

“What we saw in second half will continue through the course of 2012,” Casper said.

Thermo Fisher declined less than 1 percent to $55.71 at 3:26 p.m. New York time. The company’s shares declined 2.3 percent in the past 12 months before today.

--Editors: Andrew Pollack, James Callan

To contact the reporter on this story: Sasha Damouni in New York at sdamouni2@bloomberg.net

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net; Brad Skillman at bskillman1@bloomberg.net


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