Stock market news: Tilray goes down; Thermo Fisher makes a big purchase

The stock market experienced considerable volatility Tuesday morning, initially abandoning renewed fears about the global spread of the COVID-19 epidemic. Stocks rebounded briefly after the Federal Reserve announced that it would cut interest rates by half a percentage point in an unusual move between meetings of the Federal Open Market Committee, showing that central banks remain on their guard to support the economy in the face of potential disruptions related to the coronavirus.

However, market players quickly lost confidence in this decision, and at 11:30 a.m. EST Dow Jones Industrial Average (DJINDICES: ^ DJI) lost 477 points to 26,227 on S&P 500 (SNPINDEX: ^ GSPC)had dropped 58 points to 3,032, and the Nasdaq composite (NASDAQINDEX: ^ IXIC)had lost 133 points to 8,820.

The profit season is largely over, but news has continued to pour in from the cannabis sector, Tilray (NASDAQ: TLRY) last read about the conditions of marijuana stocks. Meanwhile, Thermo Fisher Scientific (NYSE: TMO) took advantage of the sharp declines in the stock markets to announce a strategic acquisition that could have major implications for its growth.

Tilray sees red

Tilray's shares fell 12% to a historic low after the publication of its fourth quarter financial report. The company failed to satisfy investors, questioning the entire path to profitability of the cannabis company.

Image source: Tilray.

Tilray's financial results are mixed. The company reported the same type of revenue growth that cannabis investors have come to expect, with fourth-quarter revenues tripling from levels of the previous year. But it posted a net loss seven times greater than its loss compared to the fourth quarter of last year, in part due to impairment charges linked to its revenue-sharing agreement with footwear specialist Authentic. Brands Group.

In addition, Tilray had to resort to costly financing to support its continuing losses. The cannabis grower announced a two-year senior credit facility carrying an interest rate 8 percentage points higher than the prime rate. Tilray still had $ 97 million in cash at the end of 2019, but more could be needed to seize growth opportunities.

The leaders remain optimistic, but the shareholders do not seem so sure. As the stock has lost 95% of its value from its peak shortly after its IPO in 2018, Tilray no longer has investor confidence as to what is to come.

Thermo shows the rumors were true

Elsewhere, Thermo Fisher Scientific shares jumped 6%. The company has announced a long-standing major purchase of an industry peer, opening up a new avenue for potential growth.

Thermo Fisher said on Tuesday that he would buy a medical technology specialist Qiagen (NYSE: QGEN) in a $ 11.5 billion acquisition. Under the terms of the agreement, Thermo Fisher will assume $ 1.4 billion in Qiagen net debt, and Qiagen shareholders will receive € 39 per share in cash, worth approximately $ 43. .60 dollars per share at current exchange rates. Qiagen's shares jumped 15% on the news.

Thermo Fisher highlighted the complementary nature of the two companies, with the hope that Qiagen's biological and life science diagnostic solutions will help expand the broader set of Thermo Fisher diagnostic offerings. Also from a geographic perspective, the two companies will benefit from the cross-selling of existing product portfolios. The cost savings from synergies are expected to be approximately $ 200 million per year within a few years of entering into the agreement.

Consolidation in the health care sector has accelerated in recent times, and Thermo Fisher has found a good fit at Qiagen. Investors will have to wait and see if the two companies can get the necessary approvals, but Thermo Fisher hoping to close the deal in the first half of 2021, shareholders of both stocks seem excited about the possibilities.