Exclusive: Thermo Fisher weighs Life Tech takeover-sources

Thermo Fisher Scientific Inc is considering making an offer for Life Technologies Corp , the biomedical laboratory equipment maker that is exploring a potential sale, three people familiar with the matter said on Tuesday.

Thermo Fisher, the world's largest maker of laboratory equipment and scientific instruments, is one of the parties that have held discussions with Life Technologies about a potential deal, said the sources, who asked to be anonymous because the talks are confidential.

Private equity firms KKR & Co LP , Blackstone Group LP , Bain Capital LLC and TPG Capital LP are also interested in buying Carlsbad, California-based Life Technologies, which has a $10.7 billion market capitalization, the sources said.

Waltham, Massachusetts-based Thermo Fisher has a market value of around $25 billion.

Talks with the potential buyers are at an early stage and may not lead to a transaction, the sources said.

Thermo Fisher and Life Technologies officials declined to comment. Representatives of the private equity firms declined to comment or did not respond to requests for comment.

If completed, the purchase by Thermo Fisher of Life Technologies would mark its biggest acquisition since 2006, when the company was created through the $12.8 billion merger of Thermo Electron Corp with Fisher Scientific International Inc.

The U.S. government's efforts to curb spending to fix its budget deficit has resulted in a lull in government-sponsored medical research, hurting companies that make life-science tools. Thermo Fisher's response so far has been to expand in emerging markets such as China.

Life Technologies, which makes genetic testing equipment and products used in biotechnology development, said on January 18 that its board has hired Deutsche Bank Securities and Moelis & Company to assist in its "annual strategic review". Deutsche Bank and Moelis declined to comment.

Given the sheer size of a potential leveraged buyout, private equity bidders are expected to team up as the sale process advances, Reuters reported previously.

"Fitch thinks that there is a lack of an obvious business strategy behind a leveraged buyout transaction, such as cost cutting opportunities," analysts from the credit rating agency wrote in a note on Tuesday.

"An acquisition by a strategic interest could be more likely given opportunities for cost synergies, coupled with the attractive growth potential of the company's next-generation DNA sequencing assets," Fitch added.

Thermo Fisher serves more than 350,000 customers in pharmaceutical and biotechnology companies, hospitals and clinical diagnostic labs, universities, research institutions and government agencies.

Analysts have previously suggested that Thermo Fischer may have the financial firepower to buy Life Technologies, provided it sees the rationale for an acquisition of the entire company.

"We believe Thermo may be interested in the recurring revenue and synergy potential of the research consumables business (of Life Technologies) as well as solid growth of the applied sciences business," UBS analysts wrote in a note this week.

"(Thermo) management has historically not been interested in playing in the next-generation DNA sequencing market, making the ion torrent business less attractive," they added.

(Reporting by Soyoung Kim and Greg Roumeliotis in New York; Editing by Matt Driskill)