ThermoTrex Corporation to Merge with Thermo Electron Corporation

Strategic Insights -

ThermoTrex Corporation, a public subsidiary of Thermo Electron Corporation, announced a proposed merger with its parent company, Thermo Electron Corporation. The deal, subject to various conditions, would result in ThermoTrex becoming a wholly owned subsidiary of Thermo Electron. As part of the agreement, Thermo Electron would acquire approximately 3.7 million newly issued shares of ThermoTrex common stock, increasing its ownership to over 80%. This move would allow ThermoTrex and Thermo Electron to file consolidated tax returns. In addition to the merger, ThermoTrex announced plans to record $105 million in pretax restructuring and other charges, primarily related to restructuring at its ThermoLase Corporation and Trex Medical Corporation subsidiaries.

Key Takeaways:

  • The proposed merger between ThermoTrex Corporation and Thermo Electron Corporation is subject to numerous conditions, including the establishment of a price and exchange ratio, confirmation of anticipated tax consequences, and approval by ThermoTrex's board of directors.
  • Thermo Electron would acquire approximately 3.7 million newly issued shares of ThermoTrex common stock, increasing its ownership to over 80%.
  • The acquisition is intended to allow ThermoTrex and Thermo Electron to file consolidated tax returns.
  • ThermoTrex will record $105 million in pretax restructuring and other charges, primarily related to restructuring at its ThermoLase Corporation and Trex Medical Corporation subsidiaries.
  • The majority of the charges will be recorded in the third fiscal quarter, which ends July 3, 1999.
  • The charges primarily relate to the sale or closure of ThermoLase's spas, write-offs relating to lasers, and the termination of various international joint venture arrangements at Trex Medical.
  • The company will also record a write-off of goodwill resulting from the restructuring actions.

Statistics:

  • ThermoTrex will record $105 million in pretax restructuring and other charges.
  • The majority of the charges will be recorded in the third fiscal quarter, which ends July 3, 1999.
  • Approximately 3.7 million newly issued shares of ThermoTrex common stock will be issued to Thermo Electron.
  • The price of the shares will be established at the time of sale by a committee of the board of directors of ThermoTrex.
  • ThermoTrex would become a wholly owned subsidiary of Thermo Electron as a result of the proposed merger.

Sources:

  • PR Newswire, May 24, 1999
  • ThermoTrex Corporation's press release announcing the proposed merger with Thermo Electron Corporation
  • Thermo Electron Corporation's annual report on Form 10-K for the fiscal year ended October 3, 1998, Exhibit 13