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

Qiagen researcher
The New York-based firm Davidson Kempner said the price for each of Qiagen's shares should increase about 28%, to €50 or $56 U.S., following a surge in global demand for its molecular testing products. (Photo: Qiagen)

The world has changed since Thermo Fisher Scientific reached a hard-fought, $11.5 billion agreement to acquire Qiagen, announced in the first days of March after months of negotiations and public rumors. 

Over 130 days ago, there were fewer than 100,000 confirmed coronavirus cases worldwide. Now, with that number pushing 13 million, COVID-19 has spread across the world creating sky-high demand for testing—and a hedge fund behind the Dutch diagnostics maker says it’s time for the deal to change as well.

According to the Financial Times, the New York-based Davidson Kempner said Qiagen should seek a higher price than the €39, or about $43 U.S. per share that it first agreed to. The firm holds a 3% stake in the company, and wrote a letter to Qiagen’s management saying €50 would be more in line with its value.

That could inflate the deal’s total value to about $13.4 billion, with Davidson Kempner saying it expects Qiagen’s earnings to rise by two-thirds before the end of the year. In recent, preliminary numbers for its second quarter earnings, the company reported an 18% to 19% increase in net worldwide sales compared to 2019; faster growth than expected.

COVID-19 “has highlighted and amplified the strength and importance of the company’s business in diagnostics and testing and has positioned the company to be a major beneficiary of the key secular trends in this industry,” wrote Davidson Kempner partner Michael Herzog, according to the report.

RELATED: Thermo Fisher finally lands Qiagen with $11.5B deal

Qiagen’s stock jumped nearly 15% after the deal was first announced March 3, to over $41, months after the company said it had rebuffed several takeover bids. Since then, it’s climbed another 10% to about $45, eclipsing Thermo Fisher’s premium offer as the manufacturer has worked around the clock to provide the reagents and chemicals necessary to run certain coronavirus tests.

On March 18, Qiagen outlined a plan to quadruple its production to support millions of tests per month, after certain supplies went on backorder. The company’s kits help extricate RNA strands from the virus and purify them so they can be sequenced and matched to the novel coronavirus.

Meanwhile, Thermo Fisher secured an early FDA authorization for its own COVID-19 diagnostic, and recently said its 10% growth brought in more than $1.4 billion in total revenue for the company's second quarter. Its full earnings report is due July 22.