Why Thermo Fisher Scientific Stock Tumbled Today

Key Points

• The medical device specialist announced the closing of not one, but two acquisitions.

• One was a $4 billion purchase of a healthcare business, the other was for a factory in New Jersey.

• 10 stocks we like better than Thermo Fisher Scientific ›

Sprawling medical device and solutions company Thermo Fisher Scientific (NYSE: TMO) wasn't looking all that healthy on Tuesday, at least as far as its stock was concerned. The company closed a pair of acquisitions, and the twin moves didn't seem to make some investors happy. As a result, the stock fell by more than 1%, a slightly steeper drop than the S&P 500's (SNPINDEX: ^GSPC) 0.7%.

A $4 billion deal

Of Thermo Fisher's two transactions, by far the pricier was its deal for the purification and filtration business of Solventum. It's handing out $4 billion to Solventum, formerly the healthcare business of industrial conglomerate 3M, in an all-cash deal.

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In its press release trumpeting the close of that arrangement, Thermo Fisher said that in the first year of ownership, the new unit is expected to be negatively affect the bottom line. According to its estimates, it should reduce non-GAAP (generally accepted accounting principles) adjusted net income by $0.06 per share.

Investors might be showing their impatience, however, as the company said by year five of ownership, the business should produce around $125 million in adjusted operating income thanks to "revenue and cost synergies."

Finishing up a factory acquisition

The other deal was Thermo Fisher's acquisition of a sterile finish-and-fill factory in New Jersey previously owned by pharmaceutical company Sanofi.

Under the terms of the purchase, originally announced in mid-July, Thermo Fisher said it "will continue to manufacture a portfolio of therapies for Sanofi at the Ridgefield site while expanding use of the site to meet the growing demand for U.S. manufacturing capacity from pharma and biotech customers."

The financial particulars of the factory deal have not been disclosed.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends 3M and Thermo Fisher Scientific. The Motley Fool recommends Solventum. The Motley Fool has a disclosure policy.