An $11 billion-plus sale of Life Technologies is looking less likely as a gap in price expectations with the company has left potential buyer Thermo Fisher Scientific skeptical about a deal while buyout firms' offers came up short, people familiar with the matter said this week.

Thermo Fisher, the world's largest maker of laboratory equipment and scientific instruments, had held discussions with Life Technologies but is no longer actively pursuing a deal, as a big run-up in Life Tech's shares made the economics of a transaction less attractive, one of the people said.

Likewise, private equity firms, including Blackstone Group, KKR & Co, Bain Capital and TPG Capital, have made initial offers that value Life Technologies close to where its shares are now trading, after their recent rise. The offers would need to be increased significantly to win the approval of Life Tech's board, other people familiar with the matter said.

The talks with the interested parties are continuing and other potential buyers could still emerge, the people added. They asked not to be identified because the talks are private.

Life Technologies said in a statement it was continuing with its annual strategic review, but did not refer specifically to the sale process.

"As the Board continues its annual strategic review, Life Technologies remains focused on transforming relationships with life science customers, winning in genetic analysis from discovery to diagnostics and leveraging our world-class platform to drive growth," it said.

Thermo Fisher, KKR, Bain and TPG declined to comment, while Blackstone did not respond to a request for comment.

Analysts have said Thermo Fisher would benefit from the scale and synergies that a tie-up with Life Technologies would bring, with the exception of Life Tech's genetic sequencing business, which Thermo Fisher could choose to divest after a deal. Yet a lot depends on the price Thermo Fisher would be willing to offer.

Life Tech's shares are up 30% since the start of the year, spurred primarily by its announcement on Jan. 18 that it had retained investment banks to advise it on its annual strategic review, fanning investor hopes for a sale.

The shares ended trading on Tuesday at $63.36, giving it a market value of close to $11 billion, after trading above $60 throughout February. At this level, Thermo Fisher is skeptical that it could make an offer that Life Tech's board would accept, one of the people said.

"We wonder if Thermo Fisher's shareholders would be willing to pay in the $75-per-share range that we expect Life Tech's shareholders might require from a strategic buyer in order to acquire a company with a lower organic growth profile," Credit Suisse analysts wrote in a note on Feb. 5, following the publication of Life Tech's fourth-quarter earnings.

Life Tech now trades at 14.4 times its 12-month projected earnings versus a 13.4 times average for its peer group, and has an enterprise value 9.1 times forward earnings before interest, tax, depreciation and amortization (EBITDA), compared with 7.9 times for its peers on average, according to Thomson Reuters data.

Spending cuts

On the private equity front, the proposed $24.4 billion leveraged buyout of PC maker Dell has raised market expectations for other huge deals not seen since the financial crisis of 2008.

But several private equity executives have pointed out that the Dell deal is atypical because the company's huge cash pile and the rollover of its founder's stake in the deal allow for relatively low leverage.

"You have to pay 10.5 times EBITDA roughly to convince Life Tech shareholders to sell. You can borrow only up to seven times, which leaves 3.5 to four times to equity, which is a very sizeable equity check," said one of the dealmakers, on condition of anonymity.

Life Technologies, which makes genetic testing equipment and products used in biotechnology development, has said its 2013 outlook does not presume that automatic U.S. budget cuts, known as sequestration, will kick in - a move that would constrain spending by Life Tech's government and academic customers.

The Carlsbad, California-based company has forecast revenue growth of 3 to 5% over 2012 sales of $3.8 billion. If sequestration is implemented, it would reduce revenue by about 1% and the company would expect to be at the low end of its $4.30-to-$4.45-per-share earnings guidance range for 2013, Life has said.

Thermo Fisher has said that sequestration is likely to happen and that it has taken steps to prepare. The Waltham, Massachusetts-based company declined to comment about a possible bid for Life Tech when asked about it repeatedly during the publication of its earnings.

The U.S. government's efforts to curb spending to fix its budget deficit have already resulted in a lull in government-sponsored medical research, hurting companies that make life-science tools. Thermo Fisher has responded by expanding in emerging markets such as China.

With Congress off this week, chances are diminishing that a political compromise will be reached by a March 1 deadline to avoid about $85 billion in across-the-board spending cuts, which would kick in at the beginning of March and continue through Sept. 30 as part of a decade-long $1.2 trillion U.S. budget savings plan.