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Hap­py alone Qi­a­gen changes course af­ter Ther­mo Fish­er of­fers to buy it in $11.5B deal

Dutch di­ag­nos­tics com­pa­ny Qi­a­gen — which is de­vel­op­ing tests for the on­go­ing coro­n­avirus epi­dem­ic — is be­ing ac­quired by US-based sci­en­tif­ic in­stru­ments mak­er Ther­mo Fish­er Sci­en­tif­ic in a deal val­ued at $11.5 bil­lion, in­clud­ing debt.

The an­nounce­ment comes months af­ter the Nether­lands-based com­pa­ny, which is list­ed on the NYSE, no­ti­fied in­vestors that it was re­view­ing po­ten­tial strate­gic al­ter­na­tives af­ter it re­ceived sev­er­al “in­di­ca­tions of in­ter­est” for an ac­qui­si­tion. But by De­cem­ber, it con­clud­ed it would pre­fer to go it alone.

The deal will boost Mass­a­chu­setts-based Ther­mo Fish­er’s spe­cial­ty di­ag­nos­tics plat­form that in­cludes al­ler­gy and au­toim­mu­ni­ty, trans­plant di­ag­nos­tics and clin­i­cal on­col­o­gy test­ing with mol­e­c­u­lar di­ag­nos­tics, par­tic­u­lar­ly for in­fec­tious dis­eases.

“The ac­qui­si­tion brings about strong sam­ples prep ca­pa­bil­i­ties to TMO in ad­di­tion to mol­e­c­u­lar di­ag­nos­tics and in­fec­tious dis­ease test­ing — in­clud­ing a lead­ing TB test­ing fran­chise,” SVB Leerink’s Puneet Sou­da wrote in a note, adding that the deal should fur­ther lever Ther­mo Fish­er to Covid-19.

The dead­ly coro­n­avirus epi­dem­ic has cul­mi­nat­ed in 3,000 deaths and cas­es have topped 90,000. Qi­a­gen — which pro­vid­ed equip­ment dur­ing the SARS and swine flu out­breaks — said it had shipped test kits for the nov­el coro­n­avirus to four hos­pi­tals in Chi­na for eval­u­a­tion days ago.

Ther­mo Fish­er makes and dis­trib­utes sci­en­tif­ic equip­ment, con­sum­ables, and ser­vices used by phar­ma & biotech, di­ag­nos­tics & health­care com­pa­nies, aca­d­e­m­ic & gov­ern­men­tal or­ga­ni­za­tions, as well as in­dus­tri­al com­pa­nies. Its in­stru­ments and reagents are em­ployed in the CDC-ap­proved as­say pro­to­col for the de­tec­tion of Covid-19.

The com­pa­ny, which has com­plet­ed sev­en $1+ bil­lion deals in the past decade, is set to pay €39 a share for Qi­a­gen. That works out to a pre­mi­um of 23% to Qi­a­gen’s Mon­day clos­ing.

The $11.5 bil­lion deal al­so in­cludes the as­sump­tion of $1.4 bil­lion of net debt. The trans­ac­tion, ex­pect­ed to close in the first half of next year, has been ap­proved by both boards.

This large­ly spec­u­lat­ed Qi­a­gen ac­qui­si­tion should have a lim­it­ed im­pact on oth­er large-cap com­pa­nies in the life sci­ence tools mar­ket, Sou­da added.

For Qi­a­gen, the buy­out fol­lows its strate­gic shift last year that saw it cease de­vel­op­ing its own next-gen­er­a­tion genome-se­quenc­ing ma­chines to in­stead col­lab­o­rate with bell­wether Il­lu­mi­na, which led to the de­par­ture of its long-time CEO.

Qi­a­gen, which gen­er­at­ed 2019 rev­enue of more than $1.5 bil­lion, has built a suite of ge­nom­ic an­a­lyt­ic prod­ucts based on tech­nol­o­gy en­gi­neered to ex­tract, iso­late and pu­ri­fy DNA, RNA and pro­teins from a wide range of bi­o­log­i­cal sam­ples.

Ther­mo Fish­er’s shares $TMO lift­ed 1.6% in pre­mar­ket trad­ing to $309.89, while Qi­a­gen’s stock $QGEN jumped more than 16% to $42.03.

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