Company: Qiagen NV (Qgen)
Business: Qiagen NV is a holding company based in the Netherlands. The company provides “ProBe to Insight” solutions that transform biological rehearsals into molecular knowledge. These solutions integrate sample and assay technologies, bioinformatics and automation systems. Its probing technologies are used to insulate and manufacture deoxyribonucleic acid (DNA), ribonucleic acid (RNA) and proteins from blood or other liquids, tissues, plants or other materials. His Assay technologies make these biomolecules visible for the analysis, e.g. B. the determination of the genetic information of a pathogen or a gene mutation in a tumor. Its bioinformatic solutions interpret data in order to provide implementable knowledge. The automation platforms of Qiagen based on polymerase chain reaction (PCR), sequence of the next generation (NGS) and other technologies combine them in molecular test workflows from “ProB to Insight”.
Market value: USD 9.32 billion ($ 43.13 per share)
Activist: Fivespan Partners, LP
Property: n/a
Average costs: n/a
Activist comment: Fivespan Partners, LP, is an investment company based in San Francisco, founded by Dylan Haggart and Sarah Coyne. Haggart and Coyne were partners of Valuact Capital in front of FiveSpan, and the majority of the investment team comes from Valuaact. Fivespan, named after the unique five-stone bridge in Haggart's hometown, sees itself as a bridge between the market and the company. The company prefers behind the scenes, collaborative and friendly activism, but would fall back on a deputy fight if there was no other choice. We believe that the company in situations in which it could give it a real value would look for board seats, but we do not expect Fivespan to pursue the representation of the board regulations as often as the appreciation (i.e. approximately 50% of the core portfolio positions). Haggart certainly has experience as a director of the public company. He served as director of Seagate (2018 to the present day) and Fiserv (2022 to 2024), in which he achieved 44.45% or 64.68% star returns. Fivespan is looking for high -quality, idiosyncratic companies with good, strategic assets. The company is not committed to selling its portfolio companies as a primary activist strategy, but like companies that want to own people. Accordingly, many activist campaigns of the company could end up selling the company and offer two ways to the shareholder value. The fund is a drawdown structure that invests for at least three to five years, six to eight investments at the same time and an average of $ 100 to 300 million for any investment.
What happens
Fivespan Partners built a position in Qiagen NV and had discussions with the management.
Behind the scenes
Qiagen is a company company registered in the Netherlands, which is twice listed in the USA and Germany. The company promotes sample technologies for the isolation and processing of DNA, RNA and proteins. Test technologies for creating this biomolecules for analysis; And automation solutions to bring these processes together. The company has two primary final markets, of which it refers a balanced proportion of its income: molecular diagnostics (health providers) and biosciences (Pharma/Biotech Research and other laboratory applications). It works in an extremely attractive and growing industry with high returns for invested capital (Roic) and Margen. Qiagen expressly enjoys a leading market position, has a great reputation of brands and derives around 90% of its sales from recurring sales conversions, with the rest of the sale of its instruments and related services, a razor razor blade model, derived from the sale of its instruments and related services. Despite its double and European heritage, Qiagens chairman and CEO of Qiagen have resident in the USA and achieved 52% of its division of24 in North America, 32% in Europe, in the Middle East and in Africa and 16% in Asia.
Fivespan is looking for high-quality, idiosyncratic companies with good, strategic assets and Qiagen fits well in this thesa-one health business in a growing industry with a secular tail. Despite a respected name and a strong market position, the company has difficulty creating the shareholder value according to the kovid and 1, 3- and 5-year returns of 1%, -6%or. To achieve 1%. While the peers act on about the 15 -fold EV/EBITDA and leaders like Danaher 20 times, we are currently trading about 13 times. This is in contrast to the shares that are historically traded on colleagues with a significant multiple multi -multi -multi -multi -multi -multi -multi -multi -multi -multiple manner.
Management has done the hard things right: investing in research and development, listening to the customer and protecting the company -leading brand of the company to increase its topline from 2019 to 2024 with an annual growth rate of 5.3%. Now there is the possibility to grow even faster and more focused. In an attempt to build the Empire Build, Qiagen has lost sight of the core business and invested a lot in the diagnostic business and other companies when the organic business business has a superior return on invested capital. There are three levers here to create the shareholder value. First, management should invest in and around its core business to accelerate growth. In addition, you should not keep your plan secret, but rather bring it to the market better. Second, Qiagen can be carried out much closer, so the edge of the Margin expansion leaves space. A more disciplined approach with a operating range of 25% is currently achieved by an operational margin of 30%. Third, the balance of Qiagen could be optimized. Most colleagues have far more influence and, due to the recurring type of business, should have $ 1.15 billion in cash and short-term investments, $ 1.39 billion in debts and no good acquisition goals on the horizon. By recording, Qiagen could finance additional investments in its core business and buy part of his own stocks back from growth and margin improvements at attractive prices. It is not often that there are opportunities for sales growth and margin extension at the same time. If you have such a situation, it will certainly make sense to buy your own stocks before it.
Based on his activist philosophies, we would expect Fivespan to have a position in Qiagen for some time and tried to work with the management behind the scenes. The company is a quiet investor and does not publish its positions (i.e. this is one of six current positions and the only one publicly known). We believe that the company may not play as inadequate as Fivespan. An indication of this is that the company may have mentioned a bar for his Q1 results in response to Fivespan's commitment and increased expectations of its margins, which aimed at over 30% for the year and over 31% before its timeline of 2028. Qiagen also published a press release in which the product pipeline is not described anything new per se, but a clear change in the sea in terms of management of investor communication and proactive strategic planning. There are different ways of doing this. Management can agree to use FiveSpan who does not work for real controversy measures – growth and margin improvement, the same thing that wants the same wish. Management can ignore the investor by doing measures in accordance with the plan that leads to the appreciation of the shareholders. Or management can ignore the company and continue with a flat stock price. In view of the fact that we do not expect FiveSpan to pursue a board seat here aggressively, we believe that the first option is preferable, the second is bearable and the third is unacceptable. Often the tone of an activist campaign does not depend on the activist, but on the company's reaction. This scenario could be a perfect example of this.
As already mentioned, Fivespan estimates companies with several ways to the shareholder value, of which one is strategic transactions. Qiagen is a very attractive asset. In fact, the company had discussions with several applicants about a potential transaction before the Kovid. In 2020 they agreed to an improved offer of 43 euros per share of Thermo Fisher Scientific, but the deal ultimately broke down, after Thermo did not achieve the two third offer offer threshold, which partly came from the deal due to a covid passage of the share and singing actor like Davidson Kempner. Today the business is just as strong, if not stronger, and the financial year of 25 EPS is expected to be higher than in 2020. A sale is never the first choice of Fivespan in an investment. The company will concentrate on the available operational and allocation improvements in order to create the shareholders, but evaluate that the company is offered against any potential acquisition and that the best for the shareholders is advocated and supported for the best for the best. With strategic and respected assets – and with stock trading something below the previous offer price five years ago – there is an undesirable offer for the company not outside the area of ​​the possibility.
Ken Squire is the founder and president of 13D monitor, an institutional research service for shareholders, and the founder and portfolio manager of the 13D Activist Fund, an investment fund that invests in an activist 13D investment.