Surging Demand for COVID-19 Testing Forces Thermo Fisher to Raise Its Offer for Qiagen

Back in March, Thermo Fisher Scientific announced that it had agreed to acquire Qiagen for $11.5 billion. At the time, the €39 (roughly $46) per share representing a premium of 23 percent over the March 2 closing price of Qiagen’s common stock on March 2, seemed like a fair price. But then came the pandemic and the surge in demand for Qiagen’s products for use in COVID-19 testing, which made €39 per share feel like chump change. Qiagen Shareholders Demand a New Deal Qiagen shareholders were quick to notice the disconnect between the tender price and current value of the molecular diagnostics company and accused the Qiagen board of failing to incorporate the impact of COVID-19 into the company’s standalone value. “The Company’s products have become increasingly important to governments and healthcare institutions as they seek to mitigate the risk of future pathogens and protect their citizens and economies,” wrote Davidson Kempner in a letter. The institutional investor, which holds a 3% stake in Qiagen, called Thermo Fisher’s offer price “inadequate,” noting that “the deal has become even more attractive” since it was first announced and predicting that Qiagen 2020 earnings would increase 67%, as opposed to the 3.4% annual organic growth the company has averaged over the past decade. The New Acquisition Terms  The firms apparently took notice. On July 13, less than a week after the Davidson Kempner letter was published, Thermo Fisher and Qiagen unveiled an amended agreement “to reflect the fair value of the business given the current environment.” Key terms:

• Offer price increased to €43 ($49) per share, which raises the premium to 35%;
• Minimum acceptance threshold of Qiagen’s issued and outstanding share capital at the end of the acceptance period reduced from 75% to 66.67%; and
• $95 million expense reimbursement to Thermo Fisher if minimum acceptance threshold isn’t met.

Following the announcement, Qiagen’s supervisory and managing boards reaffirmed their unanimous support for and recommendation that shareholders accept the offer and tender their shares by the end of the acceptance period on August 10. Thermo Fisher is reportedly still expecting the deal to close in the first half of 2021.

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Here’s a summary of the key M&A diagnostic deals announced in July 2020:

MERGERS, ACQUISITIONS & ASSET SALES
Acquiring Company	Target(s)	Deal Summary
Grifols	Bloodbuy	Price: Undisclosed Status: Closed Grifols acquires 10% stake in firm offering cloud-based marketplace for buying and selling of blood components
Curi Bio	Dana Solutions,	Price: Undisclosed Status: Closed Acquisition of Silicon Valley developer of AI technologies for in vitro cell-based assays for drug discovery
Eurobio Scientific	Tecomedical	Price: Undisclosed all-cash deal Status: Closed Acquisition of Swiss-based IVD test developer and distributor bolsters Eurobio’s position in European market
Illumina	Enancio	Price: Undisclosed Status: Closed Acquisition of French genomic-specific compression software startup follows last month’s purchase of BlueBee, a Netherlands-based bioinformatics firm
Predictive Oncology	Quantitative Medicine	Price: $1.8 million Status: Closed Predictive to integrate drug-response and genomic profiles databases of its Helomics subsidiary with QM’s machine-learning platform to develop new anti-cancer therapies
OncoDNA	IntegraGen	Price: $16.4 million tender offer to purchase IntegraGen at $2.55 per share, premium of over 36% over last closing price of IntegraGen shares on Euronext Growth market of Euronext Paris Status: Offer to open in Q3, subject to regulatory approval Firms plan to combine IntegraGen’s  DNA sequencing services and bioinformatics tools with OncoDNA’s oncology lab tests
LGC	Native Antigen Company	Price: Undisclosed Status: Closed Acquisition of infectious-disease antigen and antibody supplier enables LGC to expand its portfolio of reagents
Quest Diagnostics	Mid America Clinical Laboratories	Price: Undisclosed all-cash deal Status: Expected to close in Q3 Quest to acquire joint venture interests of its partner and run MACL itself Quest to also sign long-term service agreement to provide hospital lab services to 30 hospital labs associated with MACL