(Reuters) - Thermo Fisher (N:TMO) has walked away from its takeover deal with Qiagen (DE:QIA) after the German genetic testing specialist's earnings were boosted by coronavirus diagnostics, leaving its shareholders reluctant to cash out.
The U.S. lab equipment supplier's 11.3 billion euro bid was scuppered when only 44% of Qiagen shares were tendered by a Monday deadline, short of the two thirds it needed, following a hedge fund's campaign to reject the offer.
Qiagen vowed in a statement to "deliver growth and create greater value."
"The magnitude and duration of the global coronavirus pandemic have proven the increasingly critical importance of molecular testing to society. Qiagen’s business prospects have improved significantly," said Chief Executive Thierry Bernard.
Operating income jumped 84% to $186 million during the first half, as extraordinary demand for molecular technology to detect the new pathogen outweighed negative effects from lockdown measures.
Qiagen added that it now plans to buy the 80.1% it does not already own of NeuMoDx Molecular Inc, a supplier of testing gear for COVID-19 and other infections, for about $234 million.
Activist investor Davidson Kempner, owner of an 8% stake in Qiagen which campaigned against Thermo Fisher's bid, said management should now improve its interactions with shareholders, focus on high-growth businesses and be disciplined about its investments.
Evercore ISI analysts said they were doubtful a new industrial bidder was waiting in the wings as the longevity of COVID diagnostics demand was very hard to predict and earnings and market valuation may be peaking.
Thermo Fisher in July sweetened its offer to 43 euros per share from 39 euros after pressure from some investors, but still did not win over Davidson Kempner.
As part of the sweetened offer, Thermo Fisher also reduced the minimum acceptance threshold from 75% of outstanding ordinary share capital.
Qiagen's Germany listed shares were up 1% 41.72 euros at 1305 GMT.
($1 = 0.8445 euros)