NEW YORK – Following the announcement on Tuesday morning that Thermo Fisher Scientific plans to acquire Qiagen for approximately $11.5 billion in cash, Thermo Fisher executives provided further details on the rationale for the deal, which they expect to close in the first half of 2021, and fielded questions about potential obstacles.
In a conference call to discuss the acquisition, Thermo Fisher CEO, President, and Chairman Marc Casper said that Qiagen is "a great fit" for the company because of its complementary product offerings. "Our life sciences and clinical customers will benefit from an expanded portfolio that will accelerate their innovation and give them access to an even more comprehensive offer from discovery to diagnostics," he said.
Likewise, shareholders will find the deal "financially compelling" as it will "create significant value" for Thermo Fisher, he added.
Thermo Fisher plans to use its "extensive commercial reach," including its direct sales teams, Fisher Scientific customer channel, and e-commerce platform to make Qiagen's products more widely available to customers, including in fast-growing emerging markets, he said.
Specifically, Qiagen will expand Thermo Fisher's specialty diagnostics portfolio, which already includes allergy and autoimmunity testing, microbiology, and transplant diagnostics, by adding products for "the attractive molecular diagnostics market, including infectious disease testing and other important growth areas," Casper said.
As an example, he cited Qiagen's Quantiferon-TB Gold Plus latent tuberculosis detection test, which he said has greater specificity than traditional skin-based tests and "fits incredibly well with Thermo Fisher's menu of tests."
He also highlighted the QiaStat-Dx respiratory panel, which tests for several respiratory viral and bacterial pathogens and received FDA clearance last year, calling it "a very differentiated test." On the automation side, the QiaSymphony platform "offers continuous sample loading for a variety of molecular diagnostic tests performed in mid- to high-throughput labs," he added.
For life sciences customers, Qiagen's technologies "are very complementary to our capabilities in our biosciences and genetic analysis businesses," he said, noting that Qiagen has leading sample prep technologies for extracting and isolating biomolecules from different sample types. Qiagen's bioinformatics capabilities in the area of clinical sequencing also complement Thermo Fisher's, he said, though Thermo Fisher has no plans to bring back Qiagen's GeneReader sequencing platform.
"We think the digital PCR platform that they're scheduled to launch this year looks incredibly compelling, as well," he added.
Thermo Fisher CFO Stephen Williamson said that the $150 million in cost savings that Thermo envisages from the deal will come from several areas, including the elimination of costs related to Qiagen operating as a public company, business integration opportunities over time, and the deployment of the Practical Process Improvement (PPI) Business System, which Thermo Fisher has been using for several years to improve its operations.
Asked about the timing of the deal, Casper said the current novel coronavirus outbreak might have hastened it along. "The fact that there is a little bit of uncertainty in the world actually helped bring this transaction to closure in terms of being able to get the parties to agree on the terms and the price that we came to," he said.
Qiagen had previously rebuffed several suitors, saying in late December that following a strategic review, it had decided to remain a standalone business after receiving interest from several unnamed parties, which reportedly included Thermo Fisher.
While Thermo Fisher anticipates that the deal will only close next year, it feels "highly confident" that it will garner regulatory approval, Casper said, despite the fact that the combined company will likely dominate the market in areas such as sample preparation. "We have high confidence about the ability to complete the transaction," Casper said. "We're incredibly well advised and we looked at a timeframe that puts us into the first half of 2021 to allow us to work through that process thoughtfully, diligently, and successfully and complete it."
Notably, Illumina's planned acquisition of long-read sequencing company Pacific Biosciences was recently thwarted by the UK's Competitions and Markets Authority and the US Federal Trade Commission, but Casper said that Thermo Fisher's Qiagen acquisition "is not a UK jurisdiction transaction.
In the meantime, the vast majority of Qiagen's senior executive team has decided to stay with the company, Casper said, including Thierry Bernard, who will remain interim CEO.
Casper downplayed any effect the pending acquisition might have on Qiagen's ongoing partnerships with other companies, in particular Illumina and DiaSorin. Last fall, Qiagen signed a 15-year non-exclusive agreement with Illumina to develop next-gen sequencing-based diagnostic kits. Also, in early 2018, Qiagen and DiaSorin said they are collaborating to combine the QuantiFeron-TB test with DiaSorin's Liaison family of automated analyzers, and last year, the companies announced a partnership to develop a Lyme disease diagnostic test. According to Casper, Thermo Fisher has "meaningful relationships" with both Illumina and DiaSorin and regards them as "two great partners to work with going forward."
More details about the terms and conditions of the tender offer Thermo Fisher will make to acquire all Qiagen shares will be available in filings that both companies plan to make with the US Securities and Exchange Commission within the next few days, Casper said.