On a Quest for Celera

Quest Diagnostics acquires Celera for approximately $344 million

Kelsey Kaustinen
Register for free to listen to this article
Listen with Speechify
MADISON, N.J.—Diagnostic testing company Quest DiagnosticsInc. and Celera Corp., a leader in genetic diagnostics discovery anddevelopment, have entered into a definitive merger agreement. Under theagreement, Quest Diagnostics will acquire Celera for approximately $344million, or $8 per share, net of $327 million in acquired cash and short-terminvestments. The transaction value of the deal is expected to be reducedthrough the realization of a portion of Celera's available tax credit and netoperating loss carry-forwards and capitalized R&D, which togetherrepresented $117 million at the end of last year. Both companies' boards ofdirectors have approved the acquisition.
"This is an important transaction which will furtherstrengthen our leadership position in molecular diagnostics discovery anddevelopment and drive sustainable revenue growth," says Dr. Surya N. Mohapatra,chairman and CEO of Quest Diagnostics. "We will gain immediate access to animpressive range of proprietary tests and products, and a strong pipeline ofbiomarkers for the future."
Per the agreement, Quest will commence a cash tender offerthrough a wholly owned subsidiary to purchase all outstanding shares ofCelera's common stock for $8 per share in cash. A merger will follow the tenderoffer, and completion of the offer is subject to customary closing conditions,including that a majority of Celera's outstanding shares of common stock aretendered into the offer.
"We are pleased to have reached an agreement through whichCelera and our Berkeley HeartLab become part of the world's most respecteddiagnostic testing company," says Kathy Ordoñez, CEO of Celera.
The acquisition grants Quest access to a variety of assets,including Celera's portfolio of proprietary genetic biomarkers and the BerkeleyHeartLab and its proprietary cardiovascular tests, such as the KIF6 genotypingtest for predicting a patient's risk of developing coronary heart disease andresponse to statin therapy, LPA genotyping test for predicting the risk ofcoronary heart disease and response to aspirin therapy, HDL and LDL lipoproteinanalysis to aid in characterizing a patient's cardiovascular disease risk and9p21 genotyping test to predict a patient's risk of early onset myocardialinfarction.
Celera also offers genetic in-vitro diagnostics products, including test products forconditions such as cystic fibrosis, HIV drug resistance, transplantationgenetics and Fragile X syndrome. Dr. David Speechly, vice president ofcorporate affairs at Celera, says "the rich pipeline that Celera has in itsgenetic discoveries" is really the engine behind the deal, a sentiment echoedby Mohapatra.
"This transaction advances our growth strategy to be theleading innovator and provider of esoteric and gene-based testing for cancer,cardiovascular disease, infectious disease and neurological disorders,"Mohapatra says. "I am pleased at the prospect of Celera's CEO Kathy Ordoñez andkey members of her team becoming part of Quest Diagnostics."
Speechly says the two companies have worked together since2002. Quest and Celera had a collaboration in cardiovascular diseases anddiabetes, "looking at the discovery of novel diagnostic markers in thosedisease indications." With both companies' experience in diagnostic testing,the transaction is a good fit, especially given the fact that, as Speechlysays, "Quest's real focus is to drive innovative, highly differentiated testingproducts."
"By incorporating Celera into Quest's organization, it givesit sufficient scalability to address, to leverage the sales and marketingopportunities," says Speechly. "From the Quest perspective, they get access toall this R&D, all of this discovery capability." He adds that "Celera willbe its own unit within Quest, and the majority of the employees and facilitieswill remain in place."
Speechly notes that a key factor of the deal for Celera isscale, as does Ordoñez, who says that Celera's "discovery and validation of newbiomarkers has exceeded our capacity to commercialize them."
"Combining Celera's expertise in genetics with QuestDiagnostics' medical leadership, market access and scale is expected to speedthe realization of our vision to personalize medicine," Ordoñez states. "Webelieve this is a compelling transaction that accelerates the delivery of valueto our shareholders."
Quest expects the acquisition of Celera to be dilutive toits GAAP earnings by an immaterial amount in 2011, and doesn't expect it tohave a material impact on its 2012 earnings per share. When the transactioncloses at the end of April, Celera is expected to add a little more than 1percent to Quest's 2011 revenue growth.

Kelsey Kaustinen

Subscribe to Newsletter
Subscribe to our eNewsletters

Stay connected with all of the latest from Drug Discovery News.

March 2024 Issue Front Cover

Latest Issue  

• Volume 20 • Issue 2 • March 2024

March 2024

March 2024 Issue