March 18, 2011 / 11:34 AM / 8 years ago

UPDATE 2-Quest Diagnostics to buy Celera for $657 million

* $8/shr cash offer at 28 percent premium to Thursday close

* Deal expected to close by April end

* Quest sees deal adding 1 pct to 2011 rev growth

* Celera to also restate prior-year financial results

* Errors resulted in overstatement of revenue and SG&A costs (Adds details, updates stock movement)

March 18 - Lab-testing company Quest Diagnostics Inc will acquire Celera Corp for about $657 million in cash to gain access to its smaller rival’s gene-based testing technology.

Quest will pay Celera shareholders $8 per share, a premium of 28 percent to Celera’s Thursday’s close of $6.27. Celera shares, which last traded at $8 levels in June 2009, were up 27 percent at $7.98 premarket on Friday.

“We will gain immediate access to an impressive range of proprietary tests and products, and a strong pipeline of biomarkers for the future,” Quest CEO Surya Mohapatra said.

Quest, whose fourth-quarter profit fell as patients took fewer blood and other tests in an effort to cut their medical bills, expects the acquisition to slightly hurt its 2011 earnings per share.

In 2010, Quest derived almost 22 percent of its clinical testing revenue from gene-based tests, and was in talks with French drugmaker Ipsogen to market the latter’s gene-based breast cancer test.

Quest expects the transaction, which is expected to close at the end of April, to add about 1 percent to its 2011 revenue growth.

Celera, which specialises in sequencing human genome and identifying links between genetic variations and disease states, is currently focussed on cardiovascular disease and cancer.

It conducts most of its molecular diagnostic business through distribution and royalty agreements with a unit of Abbott Laboratories .

Separately, 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.

Alameda, California-based Celera also reported a wider-than-expected adjusted loss of 8 cents a share for the fourth-quarter of 2010 on revenue of $34.9 million.

Analysts, on average, were expecting the company to post an adjusted loss of 5 cents a share, on revenue of $35.4 million, according to Thomson Reuters I/B/E/S. (Reporting by Krishnakali Sengupta and Rajarshi Basu in Bangalore; Editing by Anthony Kurian, Vyas Mohan)

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