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Company: Qiagen NV (QGEN)
Business: Qiagen nv It is a holding company based in the Netherlands. The company provides a “sample to understand” solutions that convert biological patterns into molecular ideas. These solutions combine samples and analysis technologies, bioinformatics and automation. Its exemplary technologies are used to insulate and prepare deoxyribonucleic acid (DNA), fishery acid (RNA) and proteins from the blood or other fluids, tissues, plants and other materials. Its analysis technologies make these biomolecules visible to the analysis, such as the detection of genetic information of the pathogen or the mutation of genes in the tumor. Its solutions for bioinformatics interpret data for providing effective ideas. Qiagen Automation Automation Platforms based on polymesis (PCR), the next -generation sequence (NGS) and other technologies associate them in the work processes of molecular testing from “sample to understanding”.
The stock market value: $ 9.32b ($ 43.13 per share)
Activist: Fivespan Partners, LP
Property: N/a
Average cost: N/a
Activist comment: Fivespan Partners, LP, is an investment firm founded in San Francisco, founded by Dylan Hagart and Sarah Cain. To Fivespan, Haggart and Cain were partners in Calueact Capital, and most investment groups – with Valueact. Fivespan, named after the unique five stone arched bridge in Hagart’s hometown, views itself as a bridge between the market and companies. The firm prefers the backstage, joint and benevolent activity, but it turns to the proxy if it had no other choice. We believe that the firm will look for places of council in situations when it believes that it can add real value, but we do not expect Fivespan to hold a board of the council as often as it is valueact (that is, about 50% of the main positions of the portfolio). Hagart certainly has experience as a director of the public campaign. It served Director seagate (2018 to the present) and the bearing (2022 to 2024), in which it delivered stellar profitability for its terms 44.45% and 64.68% respectively, against 17.36% and 4.98% for Russell 2000. Fivespan is looking for high quality, individual business with good, strategic assets. The firm does not advocate the sale of its portfolio companies as the main strategy of activists, but as a company that people want to own. Accordingly, many firm activist companies may end up selling the company, providing two ways to the cost of shareholders. The fund is a procrastination structure that retains an investment for at least three years, seeks to have six -eight investments at the same time and averages $ 100 to $ 300 million in each investment.
What is happening
Fivespan Partners has built a position The Qiagen NV is talking to the leadership.
Behind the scenes
Qiagen is the Dutch Firm “Life Sciences Tools”, double in the USA and Germany. The company provides exemplary technologies for insulation and processing DNA, RNA and proteins; Analysis technologies for the preparation of these biomolecules for analysis; and decisions for automation to combine these processes. The company has two major final markets from which it receives a balanced share of its income: molecular diagnosis (healthcare providers) and life sciences (Pharma/Biotech Research and other laboratory applications). It works in an extremely attractive and growing field with high -income capital (ROIC) and margins. Qiagen specifically enjoys a leading position on the market, has an excellent brand reputation and benefits from about 90% of its sales from recurrent revenue, and the rest of the sale of its tools and related services, the Razor-Razorblade models. Despite its dual and European heritage, the chairman and the CEO of Qiagen is in the US, and he created 52% of his FY24 sales in North America, 32% in Europe, the Middle East and Africa and 16% in Asia.
Fivespan is looking for high quality, individual business with good, strategic assets, and Qiagen is great for this dissertation-quality medical business in the growing field with secular tail winds. However, despite the respected name and strong market position, the company fought for the creation of shareholders after cabbage, providing 1-, 3- and 5-year profitability of 1%, -6%and 1%respectively. While peers trades about 15 times EV/EBITDA, and leaders such as Danahere 20 times, Qiagen trades about 13 times. This contrasts with stocks that historically trade on considerable peers.
The management did heavy things correctly: investment in the NDDKR, listening to customers and protection of the company leading industry, its Topline growth by 5.3% of the difficult annual growth rate from 2019 to 2024. Now it is possible to grow even faster and more purposefully. In an Empire Build, Qiagen lost the basic business, putting a lot in diagnosis and other businesses when the business of sciences has a great return on the invested capital. There are three leverage here to create shareholders. First, the management must invest in and around its main business to speed up growth. Moreover, they should not keep their plan secret, but it is better to report it on the market. Secondly, Qiagen can be launched much more rigidly, leaving a place to expand the stock. Currently, 25% of operating profitability, a more disciplined approach can reach an operating margin by 30%. Third, the qiagen balance can be optimized. Most of its peers have much more leverage and should, because of the recurring business, but the company has $ 1.15 billion in cash and short-term investment, $ 1.39 billion of debt and no good targets on the horizon. By applying, Qiagen can finance additional investments in his main business and buy some of his own stocks at attractive prices before rising and improvements in margin. Not often there are opportunities for both revenue growth and margin expansion. If you have this situation, it certainly makes sense to buy your own stock ahead.
Based on the activists’ philosophy, we could expect FiveSpan to take office in Qiagen for some time and is trying to work with the shotgun. The firm is a quiet investor and does not publish his position (that is, this is one of the six modern positions and the only known publicly). We believe that the company may not play as friendly as Fivespan. The indication of this is that, perhaps in response to FIVESPAN, the company recently company pre -announced The blow by its Q1 results and increased expectations regarding its profitability, focused on 30% per year and more than 31% ahead of the 2028 terms. Qiagen also posted the press -release that describes its product pipeline. There are several ways that it can go. Guide can agree to perceive Fivespan, which does not stand for any real contradictory actions – growth and improvement of margins, the same as the guidance wants. Guide can ignore, but place the investor, taking actions that match the plan that leads to shareholders’ assessment. Either the management can ignore the company and continue on the same road with equal rates. Considering that we do not expect Fivespan to be aggressively pursuing a place here, we believe that the first option is preferable, the second is scared and the third is inadmissible. Often the tone of the activist campaign depends not on the activist, but on the reaction of the company. This scenario can be a great example of this.
As mentioned, Fivespan praises the enterprises with a few ways to the cost of shareholders, one of them is strategic operations. Qiagen is a very attractive asset. In fact, a company that pre -COVID conducted a discussion with several grooms regarding the potential transaction. In 2020 they agreed to Improved Offer With 43 euros per share from thermo fisher scientific, but the deal ended up after the thermo has not reached Two -thirds tender offers of the thresholdpartly due to caused by a shade of shareholders and vocal shareholders such as Davidson Kempner, which is released against the transaction. Today, businesses are as strong if not stronger and 225 EPS is expected to be higher than in 2020. Selling is never the first choice of Fivespan when investing. The firm focuses on operational improvements and distributions available to create the cost of shareholders, but evaluate that depending on any potential acquisition of the offer that the company can get and advocate for what is considered for shareholders. With strategic and respected assets – and from trading stocks just below the previous price of the offer compared to five years ago – an undesirable proposal for the company is not on the basis of the opportunity.
Ken Skvir is the founder and president of the 13D monitor, an institutional scientific and research service for shareholders’ activity, as well as the founder and managers of the 13D -activist fund portfolio, a mutual fund that investes in the portfolio of 13D investments.
