Sequenom, Inc. (NASDAQ: SQNM) is selling to Laboratory Corp. of America Holdings (NYSE: LH) at a huge premium: 182% over the stock’s closing just a day before the deal was made public.
Laboratory Corp has termed the deal a strategic acquisition that will complement its offerings in the women health test space. The board of Sequenom, Inc. (NASDAQ: SQNM) has already endorsed Laboratory Corp’s buyout offer and has recommended to shareholders to accept it. Approval of shareholders of Sequenom is required before the transaction can close.
Details of the deal
Laboratory Corp has agreed to pay $2.40 per share of Sequenom, Inc. (NASDAQ: SQNM) and that puts the equity value of Sequenom at $302 million. Then, the buyout agreement calls for Laboratory Corp to absorb Sequenom’s net indebtedness, which pushes the enterprise value of the deal to $371 million.
The $2.40 per share price that Laboratory Corp is offering for Sequenom implies a 182% premium over the stock’s closing price on the day immediately before the deal was announced.
The premium offer triggered strong demand for shares of Sequenom, pushing the stock up more than 176% in the last session.
All-cash transaction for Laboratory Corp, Sequenom, Inc. (NASDAQ: SQNM)
Laboratory Corp is paying for the acquisition of Sequenom, Inc. (NASDAQ: SQNM) in cash. The transaction is expected to close before the end of this year if everything goes according to plan.
The deal to sell Sequenom comes only a few months after the company laid off 20% of its workface. In addition, the company monetized its testing facility located in North Carolina. The management said at the time of the retrenchment and the sale of the test facility that the moves were designed to allow Sequenom to gain more focus on its core women’s health operation.
Before announcing the deal to sell to Laboratory Corp, Sequenom, Inc. (NASDAQ: SQNM) had said that it was looking for strategic partners that would help it commercialize its cancer liquid biopsy assay. But the management made no mention that Sequenom was also interested in shopping itself to the highest bidder.
According to Sequenom’s CEO, Dirk van den Boom, combining with Laboratory Corp makes strategic sense because it will expand their the market for their products.