Life Sciences succumbs to pounds 236m offer

Life Sciences International yesterday succumbed to a pounds 236m agreed offer from Thermo Instrument Systems of the US, which claims to be the world's biggest analytical instruments group.

News of the 135p-a-share cash offer sent shares in the London-based scientific instruments group chaired by Sir Christopher Bland soaring 41.5p to 134p. The terms of the offer will allow shareholders to keep a 3p-a-share second interim dividend the group said it planned to declare for last year.

The takeover is the second UK purchase in less than a year for Thermo, which bought Fisons' scientific instruments business in a pounds 154m deal last March. It also comes less than 12 months into a revival plan instituted at Life Sciences by Riccardo Pigliucci, the American chief executive who joined from US scientific instruments group Perkin-Elmer last March with a brief to turn the group round.

If the takeover goes through, it will end four years during which Life Sciences' shares have slumped from a peak of 179p in February 1993. After growing strongly in the late 1980s and early 1990s, the group ran into problems two years ago ranging from a disappointing acquisition to hold- ups with the US medical budget and disruption caused by consolidation among the big drugs groups which represent its main customers.

In September, Mr Pigliucci announced a plan to split the group into four businesses, which Thermo revealed yesterday would result in a pounds 7m exceptional charge in the 1996 figures. Partially offset by a pounds 3.7m gain from closing out certain foreign exchange contracts, this would leave profits at pounds 23.7m for 1996, the company estimated, below the record pounds 28.5m declared for 1994, but in line with analysts' forecasts.

Mr Pigliucci described the Thermo offer as a good one. "Our major brief was to increase shareholder value, however that happens. We were on our way to achieving a restructuring of the company, but when we got a cash offer at 50 per cent over our share price, you have to think."

He estimated that the company would have had to raise the share price to around 170p to 180p over two years to arrive at an equivalent value to the bid, even before taking account of the risk that the restructuring or the markets might turn sour.

Mr Pigliucci and five other executive directors of Life Sciences have agreed terms to stay on with the group for six months if the Thermo takeover goes through. Although he said he saw no reason to depart, if he decided to leave Mr Pigliucci stands to pick up a severance package comprising a pay-off in the region of $940,000 and option profits of around pounds 130,000.

Thermo Instrument, capitalised at around $3.2bn on the American Stock Exchange, is the largest part of Thermo Electron Corporation, which manufactures a wide range of medical, paper making, energy and industrial equipment.

The company said Life Sciences would add laboratory supplies, handling equipment and clinical instrumentation to its strength in analytical instruments.

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