A logo sign outside of the headquarters of Laboratory Corporation of America Holdings (LabCorp) in Burlington, North Carolina on November 27, 2015. Photo by Kristoffer Tripplaar *** Please Use Credit from Credit Field ***
Burlington, N.C.-based LabCorp will acquire Chiltern in a $1.2 billion all-cash deal that will expand its oncology services and bolster its growing contract research business, the diagnostics giant announced Monday.
The transaction is expected to close in the fourth quarter. Chiltern will become part of LabCorp's Covance segment, which the company added in 2015. Within one year, LabCorp expects the acquisition to add to adjusted earnings and to earn back its capital costs in three years.
Chiltern, a contract research organization with a headquarters in Wilmington, N.C., provides clinical services for pharmaceutical and medical device companies, has experience in early-stage studies. LabCorp said the acquisition will complement Covance's late-stage expertise. Chiltern is a leading contract research organization among emerging- to mid-market biopharma customers, the company said.
"Our acquisition of Covance has demonstrated the value of combining diagnostic and CRO capabilities, expertise, data and leadership," LabCorp CEO David King said in a statement. "The addition of Chiltern furthers our strategy and will provide us with enhanced capabilities across a broader client base as we continue to innovate and grow."
Demand for contract research organization services has led to a recent spate of consolidation. Thermo Fisher Scientific recently acquired Patheon in a $7.2 billion deal that will allow the companies to expand services for pharmaceuticals, boost operating income and cut costs. LabCorp acquired Covance for $6.1 billion in 2015, which helped the combined entity improve patient recruitment and efficiency in clinical trials, the companies said.
Since the Convance acquisition, LabCorp's contract research business has grown to nearly $3 billion in annual revenue, Covance CEO John Ratliff said.
"The (Chiltern) addition enhances Covance's offerings as a major partner serving the top 20 biopharma segment and expands our current offering to include a dedicated focus on the high-growth emerging and mid-market biopharma segments," he said in a statement.