By Christoph Steitz, Ludwig Burger and Rebecca Spalding
FRANKFURT/NEW YORK (Reuters) - Thermo Fisher Scientific Inc (N:TMO) said on Tuesday it agreed to acquire German genetic testing company Qiagen NV (DE:QIA) (N:QGEN) in an $11.5 billion deal as the U.S.-based company looks to bolster its health diagnostic business.
Qiagen, which has its main operations in Germany but is headquartered in the neighbouring Netherlands, is one of the world's largest suppliers of products to prepare tissue and blood samples for advanced testing.
These genetic tests play a major role in research and treatment of cancer, infectious diseases and genetic disorders.
Last month it also began shipping a new rapid testing kit for the coronavirus to hospitals in China. The outbreak has claimed more than 3,000 lives and infected more than 90,000 people globally, after spreading from China to 77 other countries and territories
At 39 euros per share, Thermo Fisher's cash offer was accepted at a 23% premium to Qiagen's closing price on Monday, Qiagen said, adding that the bid valued the company at 10.4 billion euros ($11.5 billion), including 1.26 billion euros in net debt.
Qiagen shares rose 18% on the news to 37.5 euros, on track for their best daily gain in two decades.Thermo Fisher, which has a market valuation of around $120 billion, is the leading maker of instruments, software and other services for scientific research, including the vaccines and diagnostic tests now under development to combat coronavirus.
Thermo Fisher fist approached Qiagen about a potential takeover last year, according to people familiar with the matter who asked not to be identified because the details are confidential.
In December, Qiagen ended the talks because it was not satisfied with the price offered and harbored concerns about the deal getting past antitrust regulators, one of the sources added.
Marc Casper, Thermo Fisher's chief executive officer, said that the instrumentation giant had long considered Qiagen a potential strategic partner. Qiagen's coronavirus testing capabilities were not a significant part of the deal's rationale, he added."Deals happen when they happen," Casper said in an interview. "When we got into the last few weeks, things really accelerated here. We were able to come to a price and deal terms that both companies felt are compelling."
Shares in Thermo Fisher rose 3.5% to $315.50 a share in trading on the New York Stock Exchange.
The deal was the second to be announced this week in the healthcare sector, illustrating how some companies are braving the current market volatility to pursue deals. On Monday, Gilead Sciences Inc (O:GILD) said it would buy smaller biotechnology company Forty Seven Inc (O:FTSV) for its research in immuno-oncology in a $4.9 billion deal.
QIAGEN'S TOUGH YEAR
The acquisition of Qiagen, which is expected to be completed in the first half of 2021, will immediately add to Thermo Fisher's earnings after the deal closes, the companies said.
Thermo Fisher said the deal would generate $200 million in savings by three years after the deal's close.
Jefferies analysts said they had long viewed Qiagen's strong position in research labs, plus front-end prep for molecular diagnostics as attractive to larger life science conglomerates.
For Qiagen, the deal comes after a tumultuous few months. The company's long-serving CEO Peer Schatz resigned in October when it announced a reversal of its strategy, saying it would stop developing its next-generation genome sequencing machines and instead collaborate with industry leader Illumina (O:ILMN).
JPMorgan (N:JPM) and Morgan Stanley (N:MS) served as financial advisers to Thermo Fisher, while Wachtell, Lipton, Rosen & Katz provided legal counsel.
For Qiagen, Goldman Sachs (N:GS) is lead financial advisor and Barclays (L:BARC) is serving as financial adviser, while De Brauw Blackstone (NYSE:BX) Westbroek NV, Linklaters LLP and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C. are serving as legal counsel.