A rumored matchup between Bio-Rad Laboratories and Qiagen is unlikely, an analyst said Tuesday as BIO stock fell for a second straight day.
On Monday, the Wall Street Journal reported the companies have been in talks for some time. If a deal emerges, it won't be for another few weeks or longer, according to people familiar with the matter. Any deal for Qiagen would be worth more than $10 billion.
Credit Suisse analyst Dan Leonard says the deal would be strategically sound. Bio-Rad is an expert in tools for research and diagnostics. Qiagen makes instruments to isolate and process substances from blood and tissue, like DNA, RNA and proteins. In 2021, they generated a combined $5.17 billion in sales.
"Any process for Qiagen would likely be competitive, and we believe Bio-Rad is valuation sensitive," Leonard said in a report to clients. "We can't recall Bio-Rad ever acquiring a public company."
On today's stock market, BIO stock slipped 0.7% to 390.13, paring deeper losses from earlier in the day. Still, that added to an 8.4% dive from Monday, after the report first emerged. Qiagen stock sank 1.9% to 43.05. On Monday, shares of the diagnostics company rose 3.2%.
BIO Stock: Deal Accretion In Question
The tumble for BIO stock on Monday represents concerns Bio-Rad would have to raise equity or swap stock in order to make the deal come to fruition, Leonard said. Bio-Rad currently has a market cap of $11 billion, while Qiagen is hovering just below $9.7 billion.
Both would have an impact on the deal's accretion, though Leonard says the deal could be more than 40% earnings per share accretive for Bio-Rad.
He kept his outperform rating on BIO stock.
If successful, a Bio-Rad and Qiagen tie-up would be one of the biggest recent deals among medical diagnostics companies. Illumina is still fighting for its acquisition of cancer-detection outfit Grail, a deal worth more than $7 billion. Last year, Thermo Fisher Scientific spent around $17 billion to buy contract-research firm PPD.
Thermo Fisher once planned to acquire Qiagen for about $10 billion. But investors shut that down, saying it undervalued the company.
Representatives of the two companies declined to comment in emails to Investor's Business Daily.
BIO stock and Qiagen stock have been under pressure for some time. Both have traded below their 50-day moving averages for the better part of two months, according to MarketSmith.com.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
