By Turna Ray
Laboratory Corporation of America and Monogram Biosciences have agreed "in principle" with Monogram shareholders to dismiss two class-action lawsuits filed in relation to LabCorp's impending acquisition of the diagnostics company.
"Under the terms of the proposed settlements, the claims of the named plaintiffs and the proposed class of public shareholders relating to the tender offer and the related agreement and plan of merger entered into by LabCorp and Monogram on June 22, 2009, and the transactions contemplated thereby will be dismissed," LabCorp said in a statement this week.
In addition, LabCorp extended until Aug. 3 its previously announced cash tender offer to acquire all of the outstanding shares of common stock of Monogram Biosciences. LabCorp announced its plans to acquire Monogram for $107 million last month, and the tender offer was set to expire at the end of the day on July 29 [see PGx Reporter 06-24-2009].
Following the acquisition announcement, two law firms — Levi & Korsinsky and Law Offices of Howard G. Smith — announced they were investigating Monogram's board of directors on behalf of shareholders "for possible breaches of fiduciary duty and other violations of state law in connection with their attempt to sell the company" to LabCorp.
According to an "additional disclosure" document Monogram filed with the SEC Tuesday there were two class-action lawsuits filed at the end of June. The lawsuits were filed in the Court of Chancery of the State of Delaware and in the Superior Court of the State of California, San Mateo County.
According to a statement from Levi & Korsinsky, the investigations and resulting suits were initiated because LabCorp's acquisition price "appears unfair, given that Monogram shares traded over $5.00 per share as recently as September 2008 and at $7.20 per share in August 2008 (on a split-adjusted basis) and at least one analyst set a $6.00 price target for Monogram shares."
However, LabCorp's proposed purchase price represented a significant premium over Monogram's closing price of $1.68 on June 22, the day before the acquisition was announced. The company's shares soared on June 23 to close at $4.52.
According to a statement from LabCorp, the offer period was extended in order to "allow for the public disclosure of amendments to [its] offer to purchase and Schedule TO and Monogram's solicitation/recommendation statement on Schedule 14D-9 to reflect the settlement of certain legal proceedings."
In a statement, LabCorp maintained that the settlements will not affect the $4.55 per share price agreed to at the time the merger was announced.
Monogram has agreed, as part of the settlement conditions, "to provide additional disclosures" to shareholders regarding LabCorp's acquisition offer.