Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: HSR waiting period expires for deal to create “leading healthcare diagnostics company”, (Dec 16, 2014)

By Jeffrey May, J.D.

Laboratory Corporation of America (LabCorp) announced today that the waiting period under the Hart-Scott-Rodino Antitrust Improvements (HSR) Act has expired in connection with the company's planned acquisition of Covance Inc. LabCorp's deal to acquire Covance for approximately $5.6 billion was disclosed last month. At that time, LabCorp said that the transaction would “create the world’s leading healthcare diagnostics company, capitalizing on LabCorp’s industry leadership in medical testing and Covance’s leadership in contract research.”

LabCorp is known primarily for its diagnostic testing operations, ranging from routine blood analyses to genetic testing. The company also conducts clinical trials testing through its LabCorp Clinical Trials division. Covance is a drug development services company. It helps pharmaceutical and biotech companies bring drugs to market. According to the parties, the “combination creates a comprehensive healthcare diagnostics company offering customers end-to-end solutions for drug and diagnostics development and commercialization.”

In its announcement today, LabCorp noted that the expiration of the 30-day HSR waiting period was only one hurdle in consummating the transaction. The deal also requires Covance shareholder approval. Complicating matters, a Covance investor filed a suit on December 9 in Delaware Chancery Court, challenging the deal. The lawsuit was filed by Andrews & Springer LLC.

Apparently, this latest LabCorp acquisition did not raise antitrust concerns at the FTC. However, four years ago, another of the testing company’s deals came under scrutiny by the agency.

In 2010, the FTC challenged LabCorp’s acquisition of rival of Westcliff Medical Laboratories, Inc. LabCorp ultimately prevailed. The FTC dropped an administrative action over that deal after the federal district court in Santa Ana, California, denied the agency's request for a preliminary injunction, halting the integration of the clinical laboratory companies pending an administrative trial. The agency had alleged that the combination of two of the three largest providers of laboratory services in Southern California harmed competition.

Companies: Laboratory Corporation of America; Covance Inc.

News: AcquisitionsMergers Antitrust FederalTradeCommissionNews