The transaction has been approved by the board of directors of both the companies.
Thermo Fisher will now start a tender offer to acquire all issued and outstanding shares of Patheon for $35 per share in cash.
The total consideration for this transaction is almost $7.2bn, including nearly $2bn of net debt.
Thermo Fisher Scientific president and CEO Marc Casper said: “Patheon's development and manufacturing capabilities are an excellent complement to our industry-leading offering for the biopharma market.
“Our combined capabilities will enhance our unique value proposition for these customers, create significant value for our shareholders and further accelerate our company's growth.”
Patheon has an extensive network of pharmaceutical facilities across North America and Europe employs 9,000 professionals globally.
Last year, the company reported revenue of approximately $1.9bn.
After the completion of the transaction, Patheon will become a part of Thermo Fisher's Laboratory Products and Services Segment.
Patheon chief executive officer James Mullen said: “Over the past several years, we have increased our capabilities to become a leading CDMO provider in a highly fragmented market.
“We are confident that our combined offerings and Thermo Fisher's proven track record of disciplined M&A and successful integrations will take our business to the next level.”
The combination will enable Thermo Fisher to provide complementary services, including Patheon’s CDMO services and become a stronger partner to its pharmaceutical and biotech customers.
The combined company is also expected to create significant synergies and provide cross-selling opportunities.
The transaction is expected to close by the end of this year and subject to customary closing conditions, including regulatory approval.
It has also received commitments from Goldman Sachs Bank USA and Goldman Sachs Lending Partners to finance this transaction.
Image: Thermo Fisher Scientific headquarters in Waltham. Photo: courtesy of Coolcaesar at en.wikipedia.