LabCorp (NYSE:LH) needs a little more time to close its $85 million acquisition of Orchid Cellmark (NASDAQ:ORCH).
The Burlington, North Carolina-based provider of laboratory services said Monday it has extended its offer for Orchid as it continues to work with the Federal Trade Commission to gain the regulator’s approval of the deal. LabCorp in April announced a definitive agreement to buy Orchid, which specializes in genetic testing. At the time, the companies expected to close the deal by June.
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LabCorp provides laboratory services nationwide through its network of more than 1,500 labs. But the company has said that it wants to generate more of its revenue from specialty tests. Orchid would also help with LabCorp’s ambitions for international expansion. Orchid maintains a large presence in the United Kingdom. Expansion overseas along with more specialized testing would put LabCorp on better footing to compete against chief rival Quest Diagnostics (NYSE:DGX)
The FTC on May 17 asked LabCorp for more information about the deal. With the FTC still reviewing the deal in June, LabCorp had extended its offer to July 15. The tender offer is now set to expire on Aug. 12 unless LabCorp decides on another extension.
While the FTC continues its review of the LabCorp/Orchid Cellmark merger, the companies have cleared at least one of the obstacles in the way of a deal. A New Jersey federal court has dismissed a shareholder class action suit filed by Nicholas Tsatsis. In Tsatsis v. Orchid Cellmark, Tsatsis opposed Orchid’s sale to LabCorp and claimed the offer was too low and that Orchid’s board of directors failed to maximize shareholder value. LabCorp’s offer for Orchid is valued at $2.80 per share. When LabCorp made its offer in April, Orchid stock traded at around $2 per share. Orchid currently trades at $2.75 per share. A federal judge on July 13 filed an order that finalized Tsatsis’ voluntary dismissal of the suit.
