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LabCorp offer to buy Orchid extended to July 15; FTC still reviewing deal

LabCorp‘s (NYSE:LH) deadline to buy DNA testing services firm Orchid Cellmark (NASDAQ:ORCH) has been extended to July 15, the third extension for the deal in the last month. The Burlington, North Carolina-based diagnostics and laboratory services company in April had announced a definitive agreement to buy Orchid in a deal valued at more than $85 million. […]

LabCorp‘s (NYSE:LH) deadline to buy DNA testing services firm Orchid Cellmark (NASDAQ:ORCH) has been extended to July 15, the third extension for the deal in the last month.

The Burlington, North Carolina-based diagnostics and laboratory services company in April had announced a definitive agreement to buy Orchid in a deal valued at more than $85 million. In May, LabCorp said it would extend its offer until June 1 so it could comply with a Federal Trade Commission request for more information about the deal. But since then, the deadline has been extended twice.

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In a statement, LabCorp said it is continuing to cooperate with the FTC’s request for additional information. But the companies appear to be preparing for the regulatory review to take more time than they had expected. The tender offer extension period had previously been capped at 10 days. The merger agreement has been amended to increase that limit to 30 calendar days.

LabCorp provides laboratory services through a nationwide network of more than 1,500 labs. Most of the company’s more than $5 billion in 2010 revenue was generated by conducting routine lab tests. But the company has set a target of recording 45 percent of its revenue from specialty tests. The company’s recent acquisitions reflect that strategy.

LabCorp last December completed its $925.2 million acquisition of Genzyme Genetics, a business unit of Genzyme. LabCorp said the Genzyme unit would help the company pursue its personalized medicine strategy. Last month, LabCorp expanded its presence in clinical research laboratory work with an agreement to acquire privately held Clearstone Central Laboratories, a company based in Canada. LabCorp said that Clearstone would also support LabCorp’s efforts in developing companion diagnostics while also affording LabCorp the opportunity to expand globally through Clearstone’s strong Asia presence. Orchid specializes in identity testing and has a strong presence in the United Kingdom, which would allow LabCorp to expand there.

Diagnostics companies are making the bet that specialized testing offers them growth opportunities. LabCorp competitor Quest Diagnostics (NYSE:DGX) this spring completed its $740 million acquisition of Athena Diagnostics, a neurology diagnostics unit of Thermo Fisher Scientific (NYSE:TMO). Quest has also completed its $657 million acquisition of Celera, which has a gene-based testing technology.