Laboratory Corporation of America Holdings (LabCorp) and Monogram Biosciences, Inc. announced that they have entered into a definitive agreement and plan of merger under which LabCorp will acquire all of the outstanding shares of Monogram in a cash tender offer for $4.55 per share for an implied total equity value of approximately $106.7 million, or a total enterprise value of approximately $155 million at March 31, 2009, including net indebtedness.
"The transaction announced today is a significant step in the execution of LabCorp's strategy of leadership in personalized medicine," said David P King, chairman and chief executive officer of LabCorp. "Monogram Biosciences, Inc. has an excellent clinical reputation, a market leading infectious disease test, a market leading companion diagnostic, an exciting technology platform for oncology and offers LabCorp a substantial growth opportunity. By utilizing LabCorp's national infrastructure to build on Monogram's already strong sales, we will advance our leadership in infectious disease and cancer testing, companion diagnostics and personalized medicine. We look forward to providing improved offerings to both our and Monogram's current customers."
Monogram Biosciences is a leading provider of companion diagnostics - molecular diagnostic products that help guide and target appropriate treatments. Monogram's proprietary, clinically validated Trofile assay identifies patients who are eligible for the CCR5 class of HIV drugs and is the widely adopted companion diagnostic for the HIV drug Selzentry. Monogram's PhenoSense and PhenoSense GT HIV tests measure individual patient viral drug resistance, thereby enabling physicians to design optimal, individualized treatment plans for each patient. PhenoSense and PhenoSense GT are among the most widely used HIV resistance tests in the market today. Monogram's HIV tests are used routinely by physicians for managing patient therapy and are an integral component of anti-HIV drug development and clinical evaluations for the pharmaceutical industry.
Monogram's proprietary VeraTag technology has been used to develop a sensitive means to assess HER-2 status in tissue samples and has significant potential as a tool to help guide therapy decisions in breast cancer patients. Based on the VeraTag platform, Monogram has multiple tests in development for measuring a variety of protein markers that may have clinical utility to help guide treatment decisions across a broad range of cancer drugs. The potential oncology pipeline associated with this technology is a natural extension of LabCorp's existing oncology offerings for both clinical trials and commercial clients.
"The transaction underscores the fundamental value of the Monogram business, the talent and expertise of our global team and the quality of our offerings," said William D Young, chief executive officer and chairman of Monogram Biosciences, Inc. "LabCorp has an exciting vision of the role of molecular diagnostics in personalized medicine, and we are excited to see Monogram's technology and employees become a part of that vision. We expect the transaction will significantly accelerate the development of products that will improve treatment outcomes for patients with infectious diseases and cancer."
The acquisition is expected to be approximately $0.12 dilutive to LabCorp's 2009 earnings per share (EPS), including approximately $0.04 of transaction related costs, and slightly accretive to 2010 EPS.
Under the terms of the agreement and plan of merger, LabCorp's acquisition subsidiary, Mastiff Acquisition Corp, will commence a tender offer to purchase all outstanding shares of Monogram Biosciences, Inc. for $4.55 per share in cash, without interest. Following the completion of the tender offer, LabCorp expects to merge Mastiff Acquisition Corp. and Monogram resulting in any shares not purchased in the tender offer being 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 set forth in the agreement and plan of merger, including the acquisition in the tender offer of a majority of Monogram's outstanding shares on a fully diluted basis (excluding out of the money options) and the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The closing of the acquisition is expected in the third quarter of 2009.
The board of directors of Monogram Biosciences, Inc has unanimously determined that the offer and the merger are advisable, fair to, and in the best interests of Monogram and its stockholders, approved the agreement and plan of merger and the other transactions contemplated thereby, including the tender offer, and recommended that the Monogram stockholders accept the offer and tender their shares in the offer when it is made.
The total $155 million estimated enterprise value of the transaction is based on Monogram's approximately 23.5 million fully diluted shares outstanding less net cash and cash equivalents on hand as of March 31, 2009, plus outstanding indebtedness as of that date.
Laboratory Corporation of America Holdings, a S&P 500 company, is a pioneer in commercializing new diagnostic technologies and the first in its industry to embrace genomic testing. With annual revenues of $4.5 billion in 2008, over 28,000 employees worldwide, and more than 220,000 clients, LabCorp offers clinical assays ranging from routine blood analyses to HIV and genomic testing.
Monogram Biosciences, Inc. is advancing individualized medicine by discovering, developing and marketing innovative products to guide and improve treatment of serious infectious diseases and cancer.