U.S. Markets closed

LabCorp's Takeover of Sequenom Wins Antitrust Clearance

Zacks Equity Research

Laboratory Corporation of America Holdings LH or LabCorp recently got the antitrust review clearance for its previously announced acquisition of Sequenom, Inc. SQNM, a major player in the field of non-invasive prenatal testing (NIPT) for reproductive health. According to the company, the waiting period under the HSR Act (Hart-Scott-Rodino Antitrust Improvements Act of 1976) has just got over fulfilling one of the essential criterias for the completion of this impending buyout.

Notably, following the takeover announcement, LabCorp formed an acquisition subsidiary, Savoy Acquisition Corp. which had commenced a tender offer on Aug 9, 2016 to purchase all outstanding shares of Sequenom for $2.40 per share. This tender offer will expire on Sep 7, 2016 unless extended further.

The deal was inked for an equity value of $302 million representing total enterprise value of $371 million. The acquisition is expected to get completed by the end of 2016 and is still subject to other customary closing conditions.

According to LabCorp, this buyout will be a strategic fit for the company’ business as Sequenom’s NIPT and genetic testing capabilities will further advance LabCorp’s extensive women's health test menu. The inclusion will also increase LabCorp’s geographic reach both domestically and internationally (particularly EU and the Asia-Pacific region).

We take a note that, traditionally, LabCorp has successfully outgrown itself through organic means like acquisitions and alliances. With the momentous buyout of Covance, LabCorp is vigorously trying to expand the company’s range of diagnostic offerings and create a new industry leader in both laboratory testing and CRO spaces. At the same time act as a leading provider of medical testing; besides operating as a premier full-service drug development organization.

Apart from huge buyouts like Covance, LabCorp continues to add complementary capabilities through targeted tuck-in acquisitions, the latest in the league being Sequenom. Besides, in Mar 2016, the company acquired full-service independent women's health laboratory, Pathology, Inc., including the patient service centers used to conduct the latter’s medical testing and services business.

Prior to that, in October, it had bought Safe Foods International Holdings, a food safety laboratory, the inclusion of which extended LabCorp’s size and reach in the fast-growing global food safety market. All these acquisitions are consistent with the company’s effort to reinforce its foothold in the personalized diagnostics testing market.

Zacks Rank

LabCorp currently carries a Zacks Rank #3 (Hold). Two better-ranked stocks in the sector are Align Technology Inc. ALGN and Derma Sciences Inc. DSCI. Both the stocks carry a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
SEQUENOM INC (SQNM): Free Stock Analysis Report
 
ALIGN TECH INC (ALGN): Free Stock Analysis Report
 
LABORATORY CP (LH): Free Stock Analysis Report
 
DERMA SCIENCES (DSCI): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research