Celera Stock Hits New High On Quest Diagnostics Merger

Shares of Celera Corp. (NASDAQ: CRA) touched a new 52-week high of $8.42 on Friday, as it agreed to be acquired by Quest Diagnostics Inc. (NYSE: DGX) for $8 a share or about $344 million in cash, net of $327 million in acquired cash and short-term investments.

The Madison, New Jersey-based lab-testing company Quest, through a subsidiary, will commence a cash tender offer to buy all outstanding common shares of Celera within 7 business days from March 18. Quest has secured a fully committed bridge financing for the transaction.

Quest will pay Celera shareholders $8 a share, a premium of 28 percent to Celera's Thursday's close of $6.27. Assuming a close of the transaction at the end of April 2011, Quest Diagnostics expects Celera to add just over 1 percent to its 2011 revenue growth.

The acquisition will provide Quest with immediate access to Celera's proprietary genetic tests and biomarkers pipeline. Quest will also have access to Berkeley HeartLab's test offering and specialized sales force in gene-based and esoteric cardiovascular testing. In addition, the acquisition will add Celera's genetic in vitro diagnostics products and development capability to Quest's portfolio.

Our discovery and validation of new biomarkers has exceeded our capacity to commercialize them. Combining Celera's expertise in genetics with Quest Diagnostics' medical leadership, market access and scale is expected to speed the realization of our vision to personalize medicine. We believe this is a compelling transaction that accelerates the delivery of value to our shareholders, said Kathy Ordonez, Chief Executive Officer of Celera.

Celera said it would restate results for several periods beginning in 2008 due to overstatement of revenue and costs. The company said internal control over financial reporting was not effective as of December 25, 2010.

Separately, the Alameda, California-based Celera posted fourth quarter earnings of $2.5 million or 3 cents a share, down from $3.6 million or 4 cents a share last year. Results for the last year have been restated to correct certain accounting errors.

Excluding certain non-recurring and non-cash charges, loss was $0.8 million or 1 cent a share, compared to earnings of $1.7 million or 2 cents a share last year. Revenue fell to $34.9 million from $39.2 million. Analysts had expected a loss of 5 cents a share on revenue of $35.39 million.

Celera's lab services revenue rose 5 percent to $22.2 million, while revenue from products declined 6 percent to $10.6 million. Revenue from corporate plunged 69 percent to $2.1 million, due to lower licensing revenue including the completion of payments from three licensees in the first quarter of 2010.

Quest Diagnostics said in its recent fourth quarter results that its cash and cash equivalents at the end of December 31, 2010 were $449.3 million.

Celera stock gapped open sharply higher on March 18 at $8.11 compared to previous day's close of $6.27. The stock touched a new 52-week high of $8.42. The stock closed Friday's regular trading up 33.97 percent at $8.40 on a volume of 36.89 million shares on the NASDAQ Stock Market. The stock traded between $5.35 and $8.42 during the past 52 weeks.

Quest Diagnostics stock gapped open sharply higher on March 18 at $54.40 compared to previous day's close of $54.20. The stock closed Friday's regular trading down 0.85 percent at $53.74 on a volume of 2.59 million shares on the NYSE. The stock traded between $40.80 and $60.28 during the past 52 weeks.