(Reuters) - Laboratory equipment maker Thermo Fisher Scientific Inc will buy privately held transplant diagnostics firm One Lambda for $925 million in cash to expand its fast-growing specialty diagnostics segment.
One Lambda’s diagnostic tests are used by transplant centers for tissue typing to determine the compatibility of donors and recipients, and for potential transplant rejection.
The transplant diagnostics market was worth $480 million in 2011 Thermo Fisher said, adding that the market is growing in the mid-to-high single digits.
Thermo Fisher, which significantly expanded its specialty business with a $3.5 billion buy of Swedish diagnostics company Phadia last year, expects Monday’s deal to add between 9 cents and 11 cents per share to 2013 adjusted earnings.
Specialty diagnostics includes tests for complex diseases such as cancer, infections and allergies and usually offers high margins.
One Lambda is Thermo Fisher’s third and biggest buy this year and follows a string of other sizeable deals in the diagnostics sector.
Agilent Technologies Inc said in May it planned to buy Danish cancer diagnostics company Dako for $2.2 billion, while Hologic Inc said in April it would buy Gen-Probe Inc for $3.75 billion.
Swiss drugmaker Roche has also been chasing gene sequencing company Illumina, but dropped its bid after the U.S. company rejected a sweetened offer.
Thermo Fisher competitor Life Technologies Corp had said last week that it intends to enter the transplant diagnostics market via its own technology, Goldman Sachs analyst Isaac Ro wrote in a note.
Thermo Fisher, which plans to fund the deal through a combination of cash on hand and new debt financing, said it also plans to buy back $500 million of its common shares.
The company currently has $250 million remaining under its existing share repurchase authorization, which expires on November 9. The new plan will be in effect till December 31.
The deal is expected to generate revenue and cost synergies resulting in an adjusted operating income benefit of about $15 million in 2015.
One Lambda, which had revenue of $182 million in 2011, has about 320 employees.
J.P. Morgan Securities advised Thermo Fisher on the deal, which is expected to close in the fourth quarter, while Perella Weinberg Partners advised One Lambda.
Thermo Fisher shares, which have gained just over 1 percent since the company said in May that it plans to focus on the emerging markets for growth, were up slightly at $52.32 on Monday morning on the New York Stock Exchange.
Reporting by Esha Dey and additional reporting by Zeba Siddiqui in Bangalore; Editing by Saumyadeb Chakrabarty, Supriya Kurane