Smooth Integrations Key for Fisher Scientific

A knack for integrating acquisitions has bolstered the credit rating of research and clinical products manufacturer and distributor Fisher Scientific International in the wake of the company's acquisition of Perbio Science. Fisher is buying 93.6% of total shares in Perbio, a manufacturer and supplier to the life-science and biotech industries, and is using a $250 million secured term loan to partially back the financing. The deal, led by J.P. Morgan, Deutsche Bank and Credit Suisse First Boston, wrapped up last month.

Moody's Investors Service has assigned a Ba3 rating to Fisher's term loan with a stable outlook. "[Fisher] has done well with integrating acquisitions historically," said Kathryn Kerle, v.p. and senior credit officer at Moody's. "The kinds of things we look for [in a smooth integration] are strategic fit, ability to integrate the back office, obviously how things are financed in making an acquisition, [and if] the company managed to finance it fairly conservatively," said Kerle. She cited Fisher's self-manufacturing ability and the leadership positions it has developed in several of its business activities as additional positives for the company.

While Fisher has incurred some restructuring costs in previous acquisitions, according to Kerle, it has managed them well. "It's something we keep an eye on to make sure that the management is not overpaying for the things that they buy," explained Kerle.

Kerle said she expects Fisher will grow along with the industry. EBITDA growth is predicted in the mid-teens over the next two years and has grown from $218 million in 2000 to $318 million in 2002. Furthermore, the ratings agency expects that Fisher will not make any debt-financed acquisitions over the next two years and will use its cash flow to pay down debt. The Perbio acquisition will allow Fisher to improve upon its strength of selling products to both researchers and clinicians. "The acquisition gives the company [the opportunity] to move up a little bit into more sophisticated areas while exploiting its relationship with clinicians and researchers," Kerle noted.