Quest Diagnostics enters definitive merger agreement to acquire Celera for $8 per share

Quest Diagnostics Incorporated (NYSE: DGX), the world's leading provider of diagnostic testing, information and services, and Celera Corporation (Nasdaq: CRA), one of the world's pioneers in genetic diagnostics discovery and development, announced today that they have entered into a definitive merger agreement under which Quest Diagnostics will acquire Celera for $8 per share, representing a transaction value of approximately $344 million, net of $327 million in acquired cash and short-term investments. The transaction value is expected to be further reduced through the realization of a significant portion of Celera's available tax credit and net operating loss carryforwards and capitalized R&D, which totaled $117 million at the end of 2010. The transaction was approved by the boards of directors of both companies. Celera generated revenues of $128 million in 2010.

"For Quest Diagnostics, this is an important transaction which will further strengthen our leadership position in molecular diagnostics discovery and development and drive sustainable revenue growth. We will gain immediate access to an impressive range of proprietary tests and products, and a strong pipeline of biomarkers for the future," said Surya N. Mohapatra, Ph.D., Chairman and Chief Executive Officer of Quest Diagnostics. "This transaction advances our growth strategy to be the leading innovator and provider of esoteric and gene-based testing for cancer, cardiovascular disease, infectious disease and neurological disorders," continued Dr. Mohapatra. "I am pleased at the prospect of Celera's CEO Kathy Ordonez and key members of her team becoming part of Quest Diagnostics."

Kathy Ordonez, Chief Executive Officer of Celera, stated: "We are pleased to have reached an agreement through which Celera and our Berkeley HeartLab become part of the world's most respected diagnostic testing company. Our discovery and validation of new biomarkers has exceeded our capacity to commercialize them. Combining Celera's expertise in genetics with Quest Diagnostics' medical leadership, market access and scale is expected to speed the realization of our vision to personalize medicine. We believe this is a compelling transaction that accelerates the delivery of value to our shareholders."

Quest Diagnostics will acquire strategic assets and capabilities through the transaction, including:

• Immediate Access to Proprietary Genetic Tests and Pipeline of Biomarkers to Drive Sustainable Growth. Celera was founded to sequence the human genome and identify links between genetic variations and disease states. Its renowned discovery program has identified numerous genetic biomarkers that assess disease risk or help clinicians select appropriate therapies for many diseases. Celera has generated a portfolio of proprietary genetic biomarkers for numerous key clinical needs across the disease spectrum, and has about 100 issued or pending patents. In addition, Celera's current research and development pipeline is focused on cardiovascular disease and cancer and is expected to produce significant value.


• Berkeley HeartLab's Unique Test Offering and Specialized Sales Force Enhances Leading Position in Gene-based and Esoteric Cardiovascular Testing. Berkeley HeartLab offers proprietary cardiovascular tests sold through its specialized sales force and supported by clinical educators who provide patient disease management services. Its leading tests include: HDL and LDL lipoprotein analysis to help characterize a patient's cardiovascular disease risk; KIF6 genotyping test to predict risk of coronary heart disease and response to statin therapy; 9p21 genotyping test to predict the risk of early onset myocardial infarction; and LPA genotyping test to predict risk of coronary heart disease and response to aspirin therapy.


• Adds Leading Genetic In Vitro Diagnostics (IVD) Products and Development Capability. Celera develops, manufactures and commercializes test kits and reagents and is a leading provider of molecular test products for transplantation genetics, Cystic Fibrosis, HIV drug resistance and Fragile X syndrome.

Quest Diagnostics expects the acquisition to be dilutive to its GAAP earnings per share by an immaterial amount in 2011, before anticipated charges related to the transaction. The acquisition is not expected to have a material impact on Quest Diagnostics' 2012 EPS. Assuming a close of the transaction at the end of April, 2011, Quest Diagnostics expects Celera to add just over 1% to its 2011 revenue growth.

Under the terms of the definitive merger agreement, Quest Diagnostics, through a wholly-owned subsidiary, will promptly commence a cash tender offer to purchase all the outstanding shares of common stock of Celera for $8 per share in cash. The tender offer is expected to be commenced within seven business days of today's date, and will be followed by a merger, in which all the shares of Celera common stock that have not been tendered into the tender offer will be converted into the right to receive $8 per share in cash. The completion of the tender offer is subject to the satisfaction of customary conditions, including that a majority of the outstanding shares of Celera common stock (calculated on a fully-diluted basis) are tendered into the tender offer. The transaction is subject to customary closing conditions. The transaction is not subject to any financing condition as Quest Diagnostics has secured fully committed bridge financing for the transaction.