The laboratory and diagnostics giant Thermo Fisher Scientific Inc. (NYSE: TMO) announced a huge deal for an international contract research organization (CRO) last week. Thermo Fisher is buying PPD, Inc. (NASDAQ: PPD), a leading CRO providing broad, integrated drug development, laboratory and lifecycle management services. Its customers include pharmaceutical, biotechnology, medical device, academic and government organizations. The company has offices in 47 countries and more than 26,000 employees. Its headquarters is based in Wilmington, North Carolina. 

Thermo Fisher is offering $17.4 billion for PPD, or $47.50 per share for the company, a premium of approximately 24% to the closing price of PPD’s common stock as of April 13, 2021. Thermo Fisher will also assume $3.5 billion of net debt. from PPD. In 2020, PPD generated $4.7 billion in revenue and $876 million in adjusted EBITDA. 

The transaction is expected to be immediately and significantly accretive to Thermo Fisher’s adjusted EPS, adding $1.40 in the first 12 months after close. Thermo Fisher expects to realize total synergies of approximately $125 million by year three following close, consisting of approximately $75 million of cost synergies and approximately $50 million of adjusted operating income benefit from revenue-related synergies. 

Barclays Capital, Inc. and Morgan Stanley & Co. LLC are serving as financial advisors to Thermo Fisher, and Cravath, Swaine & Moore LLP and Arnold & Porter Kaye Scholer LLP are serving as legal counsel. For PPD, J.P. Morgan Securities LLC is serving as an exclusive financial advisor, while Simpson, Thacher & Bartlett LLP is serving as legal counsel.

Thermo Fisher’s deal for PPD comes after ICON Plc (NASDAQ: ICLR) announced it was acquiring PRA Health Sciences, Inc. (NASDAQ: PRAH) for $12 billion back in February, another leading CRO. The Covid-19 pandemic was not kind to the CRO market, but it looks like in 2021, the industry and M&A market is booming.