Thermo Electron International N.V.
List of Deals
- 1969 $7,000,000 7% subordinated guaranteed debentures due 1984, convertible into common stock of Thermo Electron Corporation
Thermo Electron Corporation was founded by George Hatsopoulos and was incorporated in 1956. Hatsopoulos established the company to lend his graduate school thermodynamics experiments legitimacy, and in turn make grants easier to obtain. Though several completed and patented mechanisms were too expensive to market commercially, his pioneering efforts placed Thermo Electron among several major corporations as a leading patent mill in the area of thermodynamics and helped inspire almost thirty companies—including General Electric, North American Aviation, and General Dynamics—to enter the field.
The company survived for several years on research grants and metal fabrication work for other businesses, but was often forced to disregard profits in order to underbid competitors, acquire experience, and develop a reputation. Many Thermo Electron contracts focused on improving electrical generators and furnaces and served to draw the company into the business of industrial power generation and heating. Thermo Electron also improved industrial drying and heat-treating processes. Despite the company's status as the inventor of several new technologies, the government elected to award several subsequent contracts to larger competitors based on the belief that the smaller company did not have sufficient resources. In 1961 Thermo Electron became the object of a takeover offer from Martin Marietta, but Hatsopoulos refused the offer. After this, the government recognized the company's merit and began awarding Thermo Electron contracts that included projects related to the space program.
In 1963 the company began to acquire firms whose facilities and marketing could support company breakthroughs in metallurgy and rare metals manufacturing—both of which developed from high-temperature heat-conversion technology. Furthermore, in order to increase the availability of funds, Thermo Electron stock was placed on the Over-The-Counter Market in 1967 and on the New York Stock Exchange in 1980.
The unique entrepreneurial philosophy of Hatsopoulos greatly affected the company's growth. Thermo Electron engineers were encouraged to pursue their own inventions, and concepts with potential for commercial success were allotted substantial development budgets. An example was the invention of a modified Rankine-cycle steam engine that did not pollute. In 1968 the Ford Motor Company established a joint venture with Thermo Electron to apply this technology to automobiles. Rising gasoline prices later led Ford to abandon the project. The engine was remodeled on a smaller scale and powered by a miniature nuclear reactor; the product was used to drive an artificial heart. When tested on animals, however, the engine was found to be too hazardous for public use. This work led to the development of a battery-powered left ventricular-assist device.
The company's work in heat conversion and conservation technologies led to an annual grant of over $1 million from natural gas utilities. By 1968 this support enabled the company to develop an industrial and commercial furnace division and acquire Holcroft & Company, a furnace manufacturer. That same year, Thermo Electron purchased Lodding Engineering, a manufacturer of auxiliary equipment for the paper industry. By expanding into industrial manufacturing, Thermo Electron was better able to market its innovations, test applications of its technology, and maintain quality control. By 1970 the company had diversified into other areas of primary industrial equipment manufacturing.
Hatsopoulos had demonstrated the ability to anticipate and address burgeoning public and consumer needs. Recognizing the close relationship between technology and the environment, he monitored demand for environment-oriented technologies by observing social and political events. This was best demonstrated in 1971, when Hatsopoulos predicted that ratification of the Clean Air Act would create demand for environmental monitoring devices. Consequently, Thermo Electron marketed the first instrument to detect traces of nitrogen dioxide, a common compound in automobile exhaust and smog. By the mid-1970s the company's annual sales surpassed $100 million.