Laboratory Corp. of America Holdings (LH) agreed to acquire
DNA-testing services company Orchid Cellmark Inc. (ORCH) in a deal
valued at about $83.8 million in a bid to strengthen Lab Corp.'s
presence in the U.S. and give it a foothold in Britain.
Orchid Cellmark holders will receive $2.80 a share, a 39%
premium to Tuesday's close of $2.01. Shares were halted premarket,
while Lab Corp. edged up 40 cents at $94.05.
LabCorp has seen revenue improve in the past few quarters, but
testing volume has been pressured as the company continues to be
affected by the cancellation of two government contracts last
year.
Under the deal, set to close in the current quarter, Lab Corp.
will pay about $65.6 million when taking Orchid Cellmark's cash,
cash equivalents and other items into consideration.
Lab Corp. in February reported that its fourth-quarter profit
fell 7.6% as a larger tax provision more than offset higher testing
volume and revenue.
Orchid Cellmark last month reported that it swung to a
first-quarter loss amid a decline in U.S. forensics casework
testing services and higher operating expenses, though overall
revenue rose 5.6%.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com