LabCorp Snaps Up Sequenom in $371M Deal

July 28, 2016
LabCorp Snaps Up  Sequenom in $371M Deal
Source: Martin Barraud/Getty Images

Healthcare diagostics giant Laboratory Corporation of America Holdings (LabCorp) announed on July 27 that it will acquire Sequenom, a provider of non-invasive prenatal testing prodicts and services for $2.40 a share of Sequenom stock, or approximately $371 million. The deal is aimed at both adding a leading line of women's health and reproductive diagnostics to LabCorp's portfolio, while also strenghtneing it presence in the European and Asian markets.

Sequenom's product line incluses the first clinically validated non-invasive prenatal test, MaterniT21, and also includes molecular genetic laboratory-developed tests HerediT, HerediT UNIVERSAL, MaterniT GENOME, MaterniT21 PLUS, NextView, SensiGene, and VisibiliT.

“Sequenom’s proven best-in-class technology and strong research complement LabCorp’s extensive women’s health offering, providing patients and physicians with one source for the most complete range of testing options in women’s health, including NIPT and reproductive genetics,” LabCorp Chairman and CEO David P. King said in a statement

However, Sequenom has also had its struggles in recent years, announcing plans in January to eliminate about 20 percent of its workforce, 110 positions, as well as sell its operations within North Carolina’s Research Triangle Park—the company this year has been consolidating operations in San Diego—and find partners for its noncore assets.

The layoffs and cutbacks were part of a restructuring through which Sequenom has aimed to focus more on its core women's health business, as well as lowering operating costs, improving laboratory efficiency, and boosting organizational effectiveness.

“Over the last 9 months, Sequenom has vastly enhanced its technology, operations, and business prospects. The opportunities this transaction presents are significant and important both for our reproductive health business as well as our liquid biopsy strategy,” Sequenom President and CEO Dirk van den Boom, Ph.D., stated. “Becoming part of LabCorp helps Sequenom reach a much broader market for our innovative testing.”

Sequenom has also tried but failed to reverse federal court decisions invalidating a key patent for its noninvasive prenatal DNA test, No. 6,258,540. Last year, the U.S. Court of Appeals for the Federal Circuit (CAFC) upheld a lower court’s invalidation of the patent, agreeing with a lower court that it was unenforceable. The ruling upheld a 2013 decision by the U.S. District Court for the Northern District of California that sided with Ariosa Diagnostics, which was acquired last year by Roche for up to $625 million.

A Sequenom petition to review those earlier decisions was denied last month by the U.S. Supreme Court.

LabCorp has formed an acquisition subsidiary, Savoy Acquisition Corp., that will commence a tender offer to purchase all outstanding shares of Sequenom for $2.40 per share, or about $302 million. After completion of the tender offer, LabCorp expects to complete a merger of Savoy and Sequenom in which shares of Sequenom not purchased in the tender offer will be converted into the right to receive the same cash price per share as paid in the tender offer.

The tender offer and the merger are subject to customary closing conditions that include acquisition by Savoy of a majority of Sequenom’s outstanding shares, and the expiration or early termination of the waiting period under the Hart–Scott–Rodino Antitrust Improvements Act of 1976, as amended.

Sequenom’s board has approved the deal and has recommended that Sequenom’s stockholders accept the offer and tender their shares. The acquisition is expected to close by year end, the companies said.