Thermo Fisher’s $12.5B deal for Qiagen falls through, as COVID-19 test demand lights new path forward

While many companies have faltered under the spread of COVID-19, others may be doing a little too well for some tastes—with Qiagen’s investors turning down Thermo Fisher’s multibillion-dollar takeover proposal, following rocketing demand for its testing products.

Late last year, Qiagen was missing revenue targets and saying goodbye to its long-time CEO, and planned to walk away from developing its own diagnostic hardware under a multi-year reorganization that would favor tests built for Illumina’s sequencing machines.

Still, the Dutch manufacturer was coy about being acquired; Qiagen rebuffed multiple takeover offers in the last days of December—describing them all as “not compelling”—despite press reports that Thermo Fisher had been after the company for weeks, if not years. The lab equipment giant finally broke through in early March, and the two announced a $11.5 billion deal slated for early 2021—a 23% premium above the stock price at the time.  

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Five months and one global pandemic later, Qiagen found itself back in the spotlight. With the world clamoring for its COVID-19 diagnostic reagents and molecular testing supplies, the company’s shares outpaced the original offer as sales jumped nearly 20%. Thermo Fisher even sweetened the deal, adding an extra $1 billion after one of Qiagen’s hedge fund investors urged the company to hold out for more.

But it wasn’t enough. Investors rejected Thermo Fisher’s offer, with only 47% of shares signing up for the deal before the August 10 deadline, falling below the two-thirds minimum.

RELATED: Qiagen to reorganize around 15-year NGS partnership with Illumina as CEO quits

“The magnitude and duration of the global coronavirus pandemic have proven the increasingly critical importance of molecular testing to society,” Qiagen CEO Thierry Bernard said. The company previously rolled out plans to quadruple its reagent production, to support millions of COVID-19 tests per month with the necessary chemicals to help sequencing machines gain access to the virus’ RNA.

“Qiagen’s business prospects have improved significantly, as shown in our performance for the first half of 2020 and the strong outlook for the rest of this year and for 2021,” Bernard added. 

RELATED: Hedge fund urges Qiagen to rethink Thermo Fisher’s $11.5B takeover offer, as COVID-19 fuels testing demand

The New York-based investment fund Davidson Kempner—which recently increased its stake in Qiagen to 8%, making it its second-largest investor, and had pushed for a higher price of about $13.4 billion—did not take up the final offer, and said that fewer than half of the company’s shares lining up to be traded showed “widespread confidence in the long-term prospects of Qiagen.”

Instead, Qiagen will move forward with an acquisition of its own: The company plans to pick up the remaining stake of NeuMoDx Molecular, makers of a test for COVID-19 as well as a multiplexed panel that detects the novel coronavirus plus influenza and respiratory syncytial virus—an important tool for telling infections apart as the pandemic begins to collide with this year’s oncoming flu season.

The $234 million deal was first announced in September 2018, with Qiagen previously owning about 20% of NeuMoDx and agreeing to commercialize its tests and systems. Qiagen said it would deliver more details alongside its third-quarter earnings report.

Meanwhile, Thermo Fisher showed no signs of plans to come back to the table after announcing last week that its price would be its “best and final offer.”

“Thermo Fisher is a disciplined acquirer with a strong track record of executing value-creating transactions,” President and CEO Marc Casper said in a statement after the deal fell through. “We remain extremely well-positioned to deliver on our proven growth strategy and continue to generate significant returns for our shareholders.”

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