Solventum Sells Purification & Filtration Unit to Thermo Fisher for $4B, Boosts EPS Guidance

Solventum has sold its Purification & Filtration business to Thermo Fisher Scientific for $4 billion in cash. The deal is a key part of Solventum's plan to focus on its remaining businesses. As a result, Solventum has raised its full-year EPS guidance. The transaction is expected to be completed in the fourth quarter of 2022.

Thermo Fisher Scientific Inc. (NYSE: TMO) has completed its acquisition of Solventum's Purification & Filtration business for approximately $4.0 billion in cash [1]. The deal is a significant move for both companies, with Thermo Fisher looking to expand its bioprocessing portfolio and Solventum aiming to refocus its business.

The acquisition includes Solventum's Purification & Filtration business, which serves Bioprocessing Filtration, Healthcare, and Industrial Filtration, as well as Membranes [1]. This business will now be part of Thermo Fisher's Life Sciences Solutions segment. The deal is expected to generate approximately $750 million in revenue for Thermo Fisher in 2025 [1].

Thermo Fisher expects the acquisition to drive mid- to high-single digit organic growth and strong margin expansion [1]. The company anticipates realizing approximately $125 million in adjusted operating income from revenue and cost synergies by year five following the close of the deal [1]. The transaction is expected to be dilutive to adjusted earnings per share (EPS) in the first year by $0.06 [1].

Solventum, on the other hand, has raised its full-year EPS guidance following the sale [2]. The company's net interest expense is now expected to be $400 million, down from $450 million, due to the significant cash infusion from the sale [2]. The transaction is expected to be completed in the fourth quarter of 2022 [1].

The acquisition is a strategic move for Thermo Fisher, which aims to strengthen its bioproduction offerings with advanced filtration technologies. The company expects to broaden its reach into industries requiring ultra-pure water, such as battery, semiconductor, and medical device manufacturing [1].

Advisors for Thermo Fisher included WilmerHale, Axinn, Latham & Watkins, Hogan Lovells, and Wells Fargo [1]. The deal is expected to provide strong financial returns for Thermo Fisher, with an anticipated double-digit internal rate of return [1].

References:
[1] https://www.marketscreener.com/news/thermo-fisher-scientific-completes-acquisition-of-solventuma-s-purification-and-filtration-business-ce7c50d3df8ef125
[2] https://seekingalpha.com/news/4491259-solventum-sells-pf-unit-to-thermo-fisher-for-4-bln-raises-full-year-eps-guidance