Thermo Fisher Pays Big Multiple for Olink; Deal Expected to Accretive Year One Based on Substantial Cost/Revenue Synergies

Thermo Fisher Scientific Inc. (NYSE: TMO), has announced that it has signed a definitive agreement to acquire Olink Holding AB (Nasdaq: OLK), a prominent provider of next-generation proteomics solutions. Under the terms of the agreement, Thermo Fisher will pay $26.00 per common share in cash a 74% premium to the closing price on October 16, 2023, which was the final trading day before the transaction was announced. The transaction’s total value is estimated at roughly $3.1 billion, including net cash of around $143 million. Analysts are projecting total FY23 revenue of $193.6 million so on an EV/sales basis TMO is paying 15.3x current year sales. Olink grew revenue 7% in the most recent quarter and 47% last fiscal year (2022). However, TMO noted that the company is on track to achieve 2023 revenue of over $200 million.

Olink has established itself as a leader in multiplexed proteomics. The core technology behind Olink’s success is their Proximity Extension Assay (PEA), which provides high-throughput protein analysis compatible with the large installed base of qPCR and next-generation sequencing readout systems in the market. PEA’s unique feature is its use of 96 oligonucleotide antibody-pairs, each with distinct DNA sequences, ensuring specificity. These sequences can only hybridize with their respective partners, and subsequent proximity extension generates 96 unique DNA reporter sequences. Real-time PCR amplifies these sequences. Unlike traditional multiplexed immunoassays, where cross-reactivity can be problematic, Olink’s PEA panels are free from such concerns. Only DNA reporter pairs that match will hybridize, ensuring scalability in multiplexing without sacrificing specificity and sensitivity. Top of Form

Olink boasts a library of more than 5,300 validated protein biomarker targets and has achieved strong adoption, resulting in over 1,400 scientific publications. Headquartered in Sweden, Olink maintains operations across the Americas, Europe, and the Asia Pacific region.

Olink competes against other multiplex protein analysis systems/services from companies such as Luminex, Quanterix, Meso Scale Diagnostics, Rules Based Medicine, and Somalogic. The global multiplexed proteomics market for discovery and diagnostics is estimated to be $35 billion in aggregate.

Thermo Fisher’s CEO, Marc N. Casper, expressed the significance of this acquisition: “The acquisition of Olink underscores the profound impact that proteomics is having as our customers continue to advance life science research and precision medicine. Olink’s proven and transformative innovation is highly complementary to our leading mass spectrometry and life sciences platforms. Our company is uniquely positioned to bring this technology to customers enabling them to meaningfully accelerate discovery and scientific breakthroughs. We look forward to welcoming Olink’s colleagues to Thermo Fisher.”

The completion of this transaction is expected by mid-2024, pending customary closing conditions, regulatory approvals, and the successful completion of the tender offer. In support of the transaction, Summa Equity AB, Olink’s largest shareholder, along with additional Olink shareholders and management, who collectively hold more than 63% of Olink’s common shares, have entered into support agreements to tender their shares into the offer. Thermo Fisher intends to fund the acquisition using a combination of cash on hand and debt financing. Once finalized, Olink will become part of Thermo Fisher’s Life Sciences Solutions segment.

Olink is anticipated to achieve mid-teens organic growth as part of Thermo Fisher. In the first full year of ownership, the transaction is expected to be dilutive to adjusted EPS by $0.17. However, excluding financing costs and non-cash deal-related equity compensation costs, the transaction is expected to be accretive by $0.10 in that period. Thermo Fisher anticipates realizing approximately $125 million of adjusted operating income from revenue and cost synergies within five years following the transaction’s close. The company noted that it believes the combination of revenue and cost synergies supported by the transaction make it compelling from a financial return perspective.