8-KMaterial AgreementsFinancial EventsExhibits & Filings

THERMO FISHER SCIENTIFIC INC. 8-K Report, Material Agreement (Aug 16, 2011)

Filed August 16, 2011For Securities:TMO

Summary

Thermo Fisher Scientific Inc. (TMO) announced the issuance of $2.1 billion in aggregate principal amount of senior notes through a public offering. This issuance includes $1.0 billion of 2.250% Senior Notes due 2016 and $1.1 billion of 3.600% Senior Notes due 2021. The primary purpose of this offering is to partially fund the acquisition of the Phadia group of companies, a transaction estimated at approximately €2.47 billion (or $3.5 billion). The company expects to utilize the net proceeds, amounting to approximately $2.08 billion after expenses, to cover a portion of the cash consideration and associated costs for the Phadia Acquisition. Any remaining funding needs are anticipated to be met through available cash and the issuance of commercial paper. Furthermore, the company has terminated its $2.0 billion Bridge Credit Facility, which was established in connection with the Phadia Acquisition. This termination is a direct result of the net proceeds received from the senior notes issuance, which effectively reduced the commitments under the Bridge Facility to zero. This strategic financing move indicates progress on the significant Phadia acquisition while optimizing the company's capital structure.

Key Highlights

  • 1Thermo Fisher Scientific issued $2.1 billion in senior notes: $1.0 billion of 2.250% notes due 2016 and $1.1 billion of 3.600% notes due 2021.
  • 2The proceeds are intended to partially fund the acquisition of Phadia, a significant transaction estimated at approximately $3.5 billion.
  • 3The company expects net proceeds of approximately $2.08 billion from the note issuance after deducting underwriting discounts and expenses.
  • 4The Bridge Credit Facility, established for the Phadia Acquisition, has been terminated as commitments were reduced to zero by the proceeds from the new note issuance.
  • 5A U.S. commercial paper program was also established, allowing for the issuance of short-term unsecured promissory notes up to 397 days maturity, to help fund any remaining acquisition costs.
  • 6The senior notes are unsecured obligations, ranking senior to subordinated debt but subordinated to secured debt and structurally subordinated to subsidiary liabilities.
  • 7The indenture includes covenants restricting the incurrence of secured debt, sale-leaseback transactions, and mergers or sales of substantially all assets.

Frequently Asked Questions

The primary reason for issuing the $2.1 billion in senior notes is to partially fund the cash consideration and associated costs for the acquisition of the Phadia group of companies, a transaction valued at approximately $3.5 billion.

The company intends to fund any remaining cash consideration and costs for the Phadia Acquisition using available cash on hand and proceeds from the issuance of up to $1 billion of commercial paper. If necessary, any further shortfall will be financed through borrowings under the company's revolving credit facility.

The termination of the $2.0 billion Bridge Credit Facility signifies that the company no longer needs this specific financing source for the Phadia Acquisition, as the proceeds from the new senior notes issuance have effectively replaced its commitments. This indicates the company has secured the necessary funding through the note offering.

The senior notes carry interest rates of 2.250% for the 2016 notes and 3.600% for the 2021 notes, with semi-annual payments. They are general unsecured obligations, meaning they are subordinate to any secured debt and structurally subordinate to liabilities of subsidiaries. A key risk highlighted is a mandatory redemption at 101% of principal plus accrued interest if the Phadia Acquisition is not consummated by a certain date or if the purchase agreement is terminated.