Thermo Fisher Scientific has sweetened its deal for diagnostic manufacturer Qiagen by about 10% after the spreading COVID-19 pandemic has heightened the value of molecular testing supplies.
The two companies have agreed to amend the terms of the $11.5 billion takeover bid, which was first announced March 3—a time when there were fewer than 100,000 confirmed cases of the novel coronavirus worldwide, compared to today’s 13.5 million and counting.
The new offer increases the price per share from €39.00 to €43.00, or about $49 U.S. in cash, bringing the deal’s total value up to about $12.5 billion, including the previously disclosed assumption of about $1.4 billion of debt.
“Industry dynamics have changed considerably in the past few months, creating tailwinds and headwinds for our businesses,” said Thermo Fisher’s chairman, president and CEO, Marc Casper. “Both of our companies are playing important roles in helping customers to battle the COVID-19 pandemic.”
“After careful consideration, we’ve decided to increase our offer for Qiagen to reflect the fair value of the business given the current environment. We remain confident that this transaction will create shareholder value and, importantly, provide meaningful benefits to our customers and society by combining our capabilities to combat infectious diseases and other healthcare issues,” Casper said. “We continue to look forward to completing the transaction in the first half of 2021.”
The amendment also reduces the minimum acceptance threshold for the deal from 75% down to two-thirds of Qiagen’s issued and outstanding stock, now due by Aug. 10, which if not met would entitle Thermo Fisher to a $95 million reimbursement for expenses.
“After carefully considering the updated offer by Thermo Fisher, Qiagen’s Supervisory Board and Managing Board both unanimously recommend that shareholders accept this offer given that it reflects the improvements in our business performance and future prospects as a result of the coronavirus pandemic,” said CEO Thierry Bernard.
“The rationale for this strategic step is stronger than ever, especially as the value of molecular testing becomes ever more evident,” Bernard added. Qiagen recently delivered preliminary a report for its second quarter earnings, showing faster-than-expected net sales growth of 18% to 19% worldwide.
Thermo Fisher, meanwhile, has the cash to spare: with its own COVID-19 diagnostic and testing hardware on the market, the company recently reported 10% growth for its second quarter, bringing in more than $1.4 billion in revenue.
The updated offer also comes just days after a hedge fund backing Qiagen urged the Dutch company to seek a better price. However, the New York-based investment management firm Davidson Kempner said €50 would be more in line with its value, after Qiagen’s stock price eclipsed Thermo Fisher’s initial offer in the months following the announcement. As of July 16, Qiagen’s shares were trading at about €42 in Frankfurt.