NEW YORK (GenomeWeb) – Laboratory Corporation of America said today that it plans to acquire Sequenom for $302 million in cash. The deal is expected to close by the end of the year.
Under the terms of the merger agreement, LabCorp will acquire all of Sequenom's outstanding stock for $2.40 per share, or an equity value of $302 million, in a cash tender offer. Including Sequenom's net indebtedness, this represents a total enterprise value of approximately $371 million.
Sequenom was the first US company to offer a sequencing-based noninvasive prenatal chromosomal aneuploidy test commercially and has conducted more than 500,000 MaterniT21 tests to date. Aside from a number of NIPTs, it also markets carrier screening tests and an array-based prenatal diagnostic test, and it is working on a cancer liquid biopsy assay that was to be launched later this year.
Earlier this year, Sequenom cut 20 percent of its workforce to focus on its core women's health business and sold a testing facility in North Carolina. At the time, the company said it was looking for a strategic partner to commercialize its oncology liquid biopsy assay.
LabCorp initially offered Roche's Ariosa Diagnostics Harmony NIPT. But in 2014, it launched its own test, called InformaSeq Prenatal Test, that was based on Illumina's Verifi test.
"This is a highly strategic acquisition," LabCorp Chairman and CEO David King said in a conference call to discuss the firm's quarterly earnings, which were also released today. "Sequenom's best-in-class offering and strong R&D pipeline perfectly complements LabCorp's extensive women's health test menu. We will now offer patients and physicians one source for the full range of women's health reproductive genetics and NIPT testing."
In a statement, King said that Sequenom expands LabCorp's reach both domestically and internationally, as it offers testing services through licensing and commercial partnerships with an emphasis on the European Union and the Asia Pacific region. Sequenom and Illumina established a patent pool for their NIPT-related intellectual property in 2014, and Sequenom said in May that 46 laboratories have taken licenses so far.
Sequenom President and CEO Dirk van den Boom noted that the transaction makes sense strategically. "The opportunities this transaction presents are significant and important both for our reproductive health business as well as our liquid biopsy strategy," he said in a statement. "Becoming part of LabCorp helps Sequenom reach a much broader market for our innovative testing."
To facilitate the transaction, LabCorp has formed an acquisition subsidiary, Savoy Acquisition, that will commence a tender offer to purchase Sequenom's outstanding shares. After the offer is completed, LabCorp plans to merge Savoy Acquisition and Sequenom. In the process of that merger, shares of Sequenom that Savoy did not purchase in the tender offer will be converted into the right to receive the same cash price per share as during the tender offer.
Sequenom's board of directors has approved the deal and has recommended that Sequenom's shareholders accept the tender offer. JP Morgan is Sequenom's financial advisor and Cooley its legal advisor for the transaction. Barclays is advising LabCorp financially and Hogan Lovells is providing legal advice for the firm.
Sequenom's shares soared nearly 180 percent to $2.38 in morning trading on the Nasdaq. LabCorp's shares dipped half a percent to $137.05 on the New York Stock Exchange.