When Thermo Fisher’s buyout of Qiagen was agreed on 3 March 2020, after several months of negotiations, there had been fewer than 100,000 cases of Covid-19 confirmed globally. With the deal expected to be finalised in early 2021, Thermo Fisher is currently offering €39 per Qiagen share, a price tag which tots up to approximately $11.5bn with an assumption of $1.4bn in debt.

However, the world now looks very different than it did at the beginning of March, with global Covid-19 diagnoses pushing 13 million. As such, global demand for the types of diagnostic technologies Qiagen specialises in has skyrocketed.

Now, Qiagen shareholder Davidson Kempner Capital Management, which has a 3% stake in the company, has published a letter voicing its objection to the planned sale and has said it will not tender its shares.

Davidson Kempner believes the agreed-upon sale price does not reflect the value of the company, stating that the pandemic “has highlighted and amplified the strength and importance of [Qiagen’s] business in diagnostics and testing and has positioned the company to be a major beneficiary of the key secular trends in this industry.”

The hedge fund has stressed that a per share value of €50, rather than €39, is more in-line with Qiagen’s value as a diagnostics firm in a Covid-19 stricken world. This proposal would inflate the deal’s total value to $13.4bn.

Deal ‘no longer makes sense’ according to shareholders

In recent preliminary numbers for its second quarter earnings, Qiagen reported an 18% to 19% increase in net worldwide sales and a 68% rise in earnings compared to 2019. This has been driven by demand for its RNA sample technology kits, reagents sold to third parties for use in their own kits and cartridges for the QIAstat-DX assay analyser platform.

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Qiagen’s share price has increased by 21% since Thermo Fisher’s offer. While the shares of its European peers have risen by an average of 61% in this time, Davidson Kempner’s letter states that Qiagen’s shares would have risen at a similar rate were it not for Thermo Fisher’s bid.

According to a Reuters report, another Qiagen shareholder has also come to oppose the deal, saying the Thermo Fisher takeover “no longer makes sense” due to the substantial boost the pandemic has provided to the company.

Davidson Kempner has urged Qiagen’s board to issue an adverse recommendation change. The acceptance period for Thermo Fisher’s offer ends on 27 July, leaving the company with less time to make a decision on the matter than executives may have preferred.

The Qiagen board did not include the impact of the pandemic in its value calculations when it agreed to the €39 per share deal.

Qiagen is working around the clock

Davidson Kempner maintains that the deal came at a bad time for Qiagen, following a profit warning and the departure of its CEO Peer Schatz.

In its letter, the asset management firm said: “This undermined the company’s ability to extract fair value for its shareholders from the process, as reflected by the opportunistic approach from a number of parties immediately following the departure of the CEO in October 2019.”

Since March, Qiagen has increased production drastically, initiating 24/7 operations at two of its manufacturing sites to meet pandemic-related demands.

The company has developed Covid-19 test kits for research purposes and has previously provided testing equipment that was used during the severe acute respiratory syndrome (SARS) and swine flu outbreaks.