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LONDON, UK / ACCESSWIRE / August 2, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Laboratory Corp. of America Holdings (NYSE: LH) ("LabCorp"), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/'symbol=LH. The leading global life sciences Company announced on July 31, 2017, that it has entered into a definitive agreement to acquire Chiltern, a privately owned contract research organization, for approximately $1.2 billion in cash. After the completion of the transaction, Chiltern will become part of LabCorp's Covance segment. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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About Chiltern
Chiltern, a global contract research organization, is the leading provider of clinical solutions in a variety of specialty areas and engagement models for biopharmaceutical and medical device industries. The Company is a leading CRO among emerging-to-mid biopharma customers, with forecasted 2017 revenue and adjusted EBITDA of approximately $550 million and $95 million, respectively, and a backlog of around $1.0 billion. Chiltern has a team of more than 4,500 workers, located across 47 countries.
Terms of the Transaction
The transaction, which is subject to customary closing conditions and regulatory approvals from concerned organizations, is expected to close in Q4 2017. LabCorp is likely to fund the all-cash transaction with a combination of bank financing and bonds. Following this transaction, LabCorp expects to maintain its investment-grade credit ratings.
The acquisition meets LabCorp's financial criteria. Considering the benefit of cost synergies and excluding one-time costs relating to the transaction, the Company expects it to be accretive to adjusted earnings per share and free cash flow in year one, and to earn its cost of capital by year three.
Senior Management's View
Strengthens LabCorp's Position as a Global Life Sciences Company: David P. King, Chairman, and CEO of LabCorp, stated that the acquisition will strengthen the Company's position as a leading life sciences company that delivers innovative diagnostics and drug development solutions to improve health and improve lives. The addition of Chiltern furthers LabCorp's strategy and will provide enhanced capabilities across a broader client base as the Company continues to innovate and grow.
Enhances Customer Solutions: Jim Esinhart, Ph.D., Chiltern's CEO, said that joining LabCorp and Covance will allow Chiltern to expand its collaborative approach to bring better, more personalized therapies to market for patients every day. Customers will benefit from the expanded capabilities the transaction provides and the employees will have a greater opportunity to propel research into the future with strong, supportive partners.
Creates a Market-Leading Contract Research Organization (CRO): John Ratliff, CEO of Covance, stated, that since LabCorp acquired Covance, the Company has grown the CRO business to nearly $3 billion in annual revenue. Joining with Chiltern is likely to create a market-leading CRO, with more than 20,000 talented employees around the world. The addition is expected to enhance Covance's offerings as a major partner serving the top 20 biopharma segment and expands the current offering to include a dedicated focus on the high-growth emerging and mid-market biopharma segments.
Strategic Benefits of the Transaction
- Extends Expertise in Key High-Growth Therapeutic Areas: The acquisition creates leading oncology expertise, leveraging Covance's extensive experience in late phase with Chiltern's deep expertise in early clinical development. Also, Chiltern adds comprehensive capabilities in medical device development.
- Provides Diverse Customer Base with Strong Growth Potential: Together, Covance and Chiltern, as a combined company, has broad offerings and enhanced growth potential across all client segments. Covance has a strong presence serving the top 20 biopharma companies, whereas Chiltern is a leading CRO among emerging-to-mid market biopharma customers.
- Expands Portfolio of Flexible Clinical Development Solutions: The addition of Chiltern reinforces Covance's clinical development capabilities with full programmatic and robust FSP offerings. Chiltern's endpoint suite of interactive response technology complements Covance's Xcellerate® clinical trial technology suite.
- Significant Global Scale Opportunity: The combined company has around 11,100 employees in the Americas; 7,100 employees in Europe, the Middle-East and Africa; and 2,400 employees in Asia/Pacific, thereby providing significant growth opportunity.
Financial and Legal Advisers
J.P. Morgan Securities LLC and Wells Fargo Securities acted as financial advisers to LabCorp. Hogan Lovells and Nixon Peabody are serving as LabCorp's legal counsel. Jefferies LLC provides financial advice to Chiltern, and Hughes Hubbard and Macfarlanes are acting as Chiltern's legal counsel.
About LabCorp
LabCorp is the world's leading healthcare diagnostics company, providing comprehensive clinical laboratory and end-to-end drug development services through a national network of primary clinical laboratories and specialty testing laboratories. Headquarters in Burlington, North Carolina, the Company employs more than 50,000 people worldwide.
Last Close Stock Review
Laboratory Corp. of America's share price finished yesterday's trading session at $160.46, marginally advancing 0.98%. A total volume of 674.47 thousand shares have exchanged hands. The Company's stock price surged 13.74% in the last three months, 19.56% in the past six months, and 14.92% in the previous twelve months. Additionally, the stock rallied 24.99% since the start of the year. Shares of the Company have a PE ratio of 22.49 and currently have a market cap of $16.44 billion.
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