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Quest Diagnostics to buy Celera

Quest Diagnostics has agreed to buy Celera in a deal worth about $344m, strengthening the company’s molecular diagnostics development programme

Quest Diagnostics has agreed to buy Celera in a deal worth about $344m. The merger is intended to strengthen Quest's position in molecular diagnostics discovery and development and drive sustainable revenue growth.

Quest Diagnostics will acquire Celera for $8 per share, representing a transaction value of about $344m, net of $327m in acquired cash and short-term investments. Celera's shares rose about 34 per cent to close at $8.40 on Friday following the news.

"We will gain immediate access to an impressive range of proprietary tests and products, and a strong pipeline of biomarkers for the future," said Quest chairman and CEO Surya N Mohapatra. "This transaction advances our growth strategy to be the leading innovator and provider of esoteric and gene-based testing for cancer, cardiovascular disease, infectious disease and neurological disorders."

Quest said Celera CEO Kathy Ordoñez and other key executives will stay on at the merged company.

Celera was founded in 1988 with the aim of sequencing the human genome. It was acquired by Applera Corporation but separated from that company and started trading on the NASDAQ in July 2008. Relatively recently, the company moved its base from Maryland to Alameda, California, and began to focus on developing personalised diagnostics and medicines.

Celera has identified a number of genetic biomarkers to help predict disease risk or select appropriate therapies. The company's current research and development pipeline is focused on cardiovascular disease and cancer.

In addition, the company's Berkeley HeartLab offers cardiovascular tests sold through a specialised sales force and supported by clinical educators who provide patient disease-management services. Celera also develops, manufactures and commercialises test kits and reagents and is a leading provider of molecular test products for transplantation genetics, cystic fibrosis, HIV drug resistance and Fragile X syndrome.

News of the acquisition came as Celera reported disappointing fourth-quarter net income, which dropped 31 per cent compared to the same period in the previous year due to a slowdown in licensing and products revenue. Net income for the three months ended December 25 was $2.5m, or 3 cents per share, compared with net income of $3.6m, or 4 cents per share, in the fourth quarter of 2009. Revenue was $34.9m, a decline of 11 per cent.

For the full fiscal year, Celera reported a loss of $24.6m, or 30 cents per share, on revenue of $128.2m.

21st March 2011

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