LabCorp Looks to Fortify U.K. Position in DNA Testing with $85.4M Purchase of Orchid Cellmark
Company offers services in forensics and family relationship DNA testing.!--h2>
With an eye on the U.K. identity testing market, the Laboratory Corporation of America® (LabCorp) is offering $85.4 million to take over Orchid Cellmark. The cash proposal comes in at $2.80 per share, 39% more than Orchid’s closing price yesterday of $2.01. Under the merger plans, LabCorp has formed an acquisition subsidiary, OCM Acquisition, that will commence the tender offer for Orchid Cellmark.
“We are very pleased that Orchid Cellmark, a premier DNA testing business with a strong reputation for exceptional quality, reliability, and customer service is joining our family,” says David P. King, chairman and CEO of LabCorp. “The proposed acquisition of Orchid Cellmark significantly diversifies and strengthens our specialized forensic and family relationship testing.”
Orchid Cellmark is a provider of DNA testing services primarily for forensic and family relationship applications. The latter business conducts paternity, immigration, adoption, tribal, heritage ID, genealogy, estate, kinship, twin, as well as infidelity and nonstandard testing. In the agriculture field, the company supplies DNA testing services for selective trait breeding. Orchid Cellmark has accredited laboratories in the U.S. and U.K.
Service revenues for 2010 grew approximately 10% to $63.7 million, up from $58.1 million for the full year of 2009. "Fourth quarter results reflect continued company growth," Thomas Bologna, president and CEO of Orchid Cellmark, noted when financial results were released on March 10.
"Our U.K. business grew by over 31%, and the forensics component of that business grew by approximately 40%. While our total U.S. business was down approximately 11% in the fourth quarter, our paternity business has stabilized, and we completed the consolidation of our U.S. testing facilities in 2010, which we expect will continue to favorably impact our U.S. results."
The $85.4 million total estimated purchase price to stockholders of the transaction is based on Orchid Cellmark’s approximately 30.5 million fully diluted shares outstanding including options with an exercise price less than $2.80 per share. Orchid Cellmark’s cash and short-term investments as of December 31, 2010, were $20 million.
LabCorp commercializes diagnostic technologies and had revenues of $5 billion in 2010. The company offers tests ranging from routine blood analyses to reproductive genetics to DNA sequencing. LabCorp aims to further its scientific expertise and innovative clinical testing technology with its Centers of Excellence: The Center for Molecular Biology and Pathology, National Genetics Institute, ViroMed Laboratories, The Center for Esoteric Testing, Litholink Corporation, Genzyme Genetics, Dianon Systems, US LABS, Monogram Biosciences, and Esoterix and its Colorado Coagulation, Endocrine Sciences, and Cytometry Associates laboratories. LabCorp conducts clinical trials testing through its Esoterix Clinical Trials Services division.