What: Shares of FEI Company (NASDAQ:FEIC) surged on Friday, up nearly 14% by 11:00 a.m. EDT. Driving today's gain was news that the company had agreed to be acquired by Thermo Fisher Scientific (NYSE:TMO) for $4.2 billion in cash, or $107.50 per share.

So what: According to Thermo Fisher Scientific CEO Marc Casper, "the addition of FEI's leading electron microscopy platform is an outstanding strategic fit with our company and will create significant value for our customers and our shareholders."

Specifically, Thermo Fisher sees the addition of FEI Company having four major strategic benefits:

  • FEI Company's leading electron microscopy platform will complement Thermo Fisher Scientific's mass spectrometry leadership to accelerate advancements in structural biology.
  • The transaction will also create new opportunities to expand its presence in the attractive materials science market.
  • FEI Company's proprietary global services business generates a high-margin recurring revenue stream.
  • The transaction will deliver immediate and attractive financial benefits, with the deal expected to be accreative to Thermo Fisher's adjusted earnings by $0.30 per share after the first full year.

Thermo Fisher Scientific plans to have FEI Company become a part of its analytical instruments segment after closing the transaction, which is expected by early next year.

Now what: Typically, when it's an all-cash deal like this that won't close for several months, the target company's stock will trade a bit below the offer price to reflect the potential for the transaction to fall through. However, investors apparently are banking on a higher offer after shares of FEI Company jumped past the offer price, trading as high as $108.08 per share by mid-morning. That doesn't mean a competing bid will emerge, but it is something to consider.

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