LabCorp to Acquire Covance for $5.6 Billion

LabCorp and Covance Inc. have entered into a definitive agreement under which LabCorp will acquire Covance for approximately $5.6 billion. The combination will capitalize on LabCorp’s industry leadership in medical testing and Covance’s leadership in contract research. The deal has been approved by the boards of directors of both companies and is expected to close in the first quarter of 2015.

LabCorp provides medical laboratory testing and services through a national network of primary clinical laboratories and specialty testing laboratories. Covance is one of the world’s most comprehensive drug development companies and a leader in nutritional analysis. Together, the combined company will offer medical testing as well as full-service drug development, partnering with customers across a broad continuum from biopharmaceutical research to drug and diagnostic development to commercialization.

The combined company will leverage technologies that improve patient recruitment for clinical trials, enhance efficiency in the conduct of clinical trials, and deliver data faster to drug sponsors, physicians, and patients. Covance’s risk-based patient monitoring tools will enhance LabCorp’s existing capabilities in predictive analytics, benefitting at-risk patients, risk-bearing physicians, and payors. Additionally, the combined company will leverage the increased scale of its central laboratory operations and collective data resources to drive greater R&D productivity.

LabCorp chairman and chief executive officer David P. King and LabCorp chief financial officer Glenn A. Eisenberg will serve, respectively, as chairman/CEO and CFO of the combined company. Covance chairman and CEO Joe Herring will lead LabCorp’s Covance division and report directly to Mr. King. LabCorp’s headquarters in Burlington, NC will be the corporate headquarters of the combined company and Covance’s headquarters in Princeton, NJ will be the operating headquarters for the Covance division, which will continue to do business under the Covance brand.

Mr. King commented, “This transaction provides LabCorp with immediate scale and a comprehensive market-leading platform in the $141 billion biopharmaceutical research and development market, while at the same time achieving the new sources of revenue, broader payor mix, and greater international presence we have long pursued. Covance also has market access and nutritional businesses that we view as great growth opportunities. By joining our highly compatible and complementary capabilities, the combined company will be an industry leader in both the laboratory and CRO spaces, characterized by global scale, enhanced offerings, new efficiencies, broader and deeper customer relationships, and a differentiated business model. Combining with Covance is fully aligned with our five pillar strategy and broadens our portfolio consistent with our vision of being a trusted partner to healthcare stakeholders, providing knowledge to optimize decision-making, improve health outcomes, and reduce treatment costs.”