By Kirell Lakhman
The Federal Trade Commission has already delayed by four months LabCorp's ability to close its acquisition of Orchid Cellmark and doesn't appear able to wrap things up just yet.
LabCorp, which had originally expected to close the deal by the end of June, yesterday further delayed its tender offer for Orchid's shares, this time until the close of business Sept. 9.
This means FTC's four-month inquisition has delayed the closing five times and by at least 47 days and counting, and has outlived a proposed class-action lawsuit seeking to bar the acquisition.
Absorbing one delay after another, LabCorp answers each new FTC request with its own note saying it is "cooperat[ing] with the FTC’s request for additional information and is consequently further extending the expiration of the tender offer."
LabCorp announced its $85.4 million bid April 19 to acquire the identity- and forensic-testing specialist, a strategically wise move for at least two reasons: It will help LabCorp grow its forensics business and enable it to plant its flag in the UK and compete more forcefully overseas with its biggest rival, Quest.
But exactly one month later FTC sent LabCorp a letter requesting additional information about its plans for Orchid. This caused LabCorp to delay — it delicately said "extend" — the offer's closing date to Aug. 12.
That day wasn't to last long. FTC pestered LabCorp four more times for additional information: on June 2, June 16, July 18, and, most recently, Aug. 15, each time seeking "additional information." This translates into a request every 25 days on average.
As of Aug. 12, more than 87 percent of Orchid's shares have been tendered.
Have a Hart
What has gotten FTC all aquiver isn't really a mystery, though it's founded on a misperceived premise.
Because LabCorp's mound of "request for more information" statements mentions the 35-year-old Hart-Scott-Rodino Antitrust Improvements Act, it's at least clear that the agency is concerned LabCorp's forensic business may get too big for the market.
Perhaps the agency thought comments made by LabCorp CEO David King signaled the need for additional due diligence. In mid-April King said having Orchid on board will "strengthen [LabCorp's] specialized forensic and family relationship-testing" business.