NEW YORK (GenomeWeb News) – Laboratory Corporation of American Holdings today announced a definitive agreement to purchase Genzyme Genetics for $925 million in an all-cash deal.
LabCorp will purchase the Genetics segment in its entirety, including all testing services, technology, intellectual property rights, and its nine testing laboratories. LabCorp is "committed" to offer employment to all of Genzyme Genetics' approximately 1,900 employees, including senior management, Genzyme said.
In a statement, David King, chairman and CEO of LabCorp, said in that the acquisition will expand his firm's capabilities in several testing areas including those in reproductive, genetic, hematology-oncology, and its ability to do clinical trials as a central laboratory.
In addition, the deal "provides us with an unprecedented opportunity for revenue growth in our key strategic focus areas of esoteric testing and personalized medicine," he said.
LabCorp operates 38 primary testing locations and more than 1,500 patient service centers.
Genyzme Genetics is a business unit of Genzyme and performs more than 1.5 million clinical tests each year. In 2009, it generated about $371 million in revenues. The menu of services it provides includes maternal serum screening, prenatal diagnostics, carrier screening, and postnatal testing.
The sale of the business is part of a strategy announced in the spring by Genzyme to divest three businesses in order to concentrate on its core business.
In a statement, Henri Termeer, chairman and CEO of Genzyme, said that the sale of the Genetics business unit "demonstrates the strategic value of Genzyme Genetics and the strong franchise we've built over a 20 year period," and added that it will "create stronger returns on invested capital."
Plans to sell two other businesses, diagnostic products and pharmaceutical intermediates, "remain on track," Genzyme said.
Genyzme was advised on the deal by Credit Suisse and Goldman Sachs. LabCorp was advised by Citi and Lazard on the transaction and has obtained a financing commitment from Citi to provide debt financing.
The deal comes two weeks after Genyzme rejected for the second time an $18.5 billion offer from drugmaker Sanofi-Aventis to buy all of Genzyme, saying the bid price was inadequate. Sanofi-Aventis said it is standing by its offer.
Last week, Termeer also told Genzyme employees that the company would be cutting its workforce by about 1,000 jobs over the next 15 months as part of a restructuring.