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THERMO FISHER SCIENTIFIC INC. 8-K Report, Material Agreement (Aug 23, 2021)

Filed August 23, 2021For Securities:TMO

Summary

Thermo Fisher Scientific Inc. (TMO) announced on August 23, 2021, the successful completion of a public offering of $3.1 billion in aggregate principal amount of senior notes. This debt issuance comprises $700 million in 1.750% notes due 2028, $1.2 billion in 2.000% notes due 2031, and $1.2 billion in 2.800% notes due 2041. The primary purpose of this financing is to fund a portion of the cash consideration for the previously announced acquisition of PPD, Inc. The company anticipates utilizing the net proceeds, estimated at approximately $3.05 billion after expenses, to facilitate this significant acquisition. Pending the closing of the PPD acquisition, TMO may temporarily use a portion of these proceeds for general corporate purposes, including other acquisitions, debt refinancing, working capital, capital expenditures, or short-term investments.

Key Highlights

  • 1Thermo Fisher Scientific issued $3.1 billion in senior notes across three tranches: 2028, 2031, and 2041 maturities.
  • 2The issuance includes notes with coupon rates of 1.750% (2028), 2.000% (2031), and 2.800% (2041).
  • 3The primary use of the net proceeds, approximately $3.05 billion, is to finance part of the cash consideration for the acquisition of PPD, Inc.
  • 4The Notes are general unsecured obligations of the company, ranking equally with existing unsecured and unsubordinated debt.
  • 5The indenture includes covenants restricting the incurrence of secured debt on principal properties and limits on sale and lease-back transactions.
  • 6A change of control event coupled with a credit rating downgrade by two major rating agencies could trigger a mandatory repurchase offer at 101% of principal.
  • 7Pending the PPD acquisition closing, proceeds may be used for general corporate purposes, including other acquisitions or debt repayment.

Frequently Asked Questions

The primary reason for issuing these senior notes is to fund a portion of the cash consideration for the previously announced acquisition of PPD, Inc. The net proceeds are expected to cover a significant part of the acquisition cost.

Thermo Fisher Scientific issued $700 million of 1.750% Senior Notes due 2028, $1.2 billion of 2.000% Senior Notes due 2031, and $1.2 billion of 2.800% Senior Notes due 2041. Interest is paid semi-annually, and the notes have specified redemption provisions and call dates.

The PPD acquisition is a significant strategic move for Thermo Fisher Scientific, and this debt issuance indicates the company is financing a substantial part of the deal. Investors should monitor the closing conditions and integration of PPD, Inc. to understand its impact on future financial performance.

The notes are unsecured obligations and rank pari passu with other unsecured debt. The indenture contains covenants that limit the company's ability to incur secured debt on principal properties and engage in sale-leaseback transactions. Additionally, a change of control event combined with a significant credit rating downgrade could trigger a repurchase offer for the notes.