Quest Diagnostics 2013 Annual Report Download - page 90

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F- 18
Acquisition of Celera Corporation
On March 17, 2011, the Company entered into a definitive merger agreement with Celera Corporation (“Celera”)
under which the Company agreed to acquire Celera in a transaction valued at approximately $344 million, net of $326 million
in acquired cash and short-term marketable securities. Additionally, the Company expects to utilize Celera's available tax
credits, net operating loss carryforwards and capitalized tax research and development expenditures to reduce its future tax
payments by approximately $110 million, of which $40 million was utilized through December 31, 2013. Celera is a healthcare
business focused on the integration of genetic testing into routine clinical care through a combination of products and services
incorporating proprietary discoveries. Celera offers a portfolio of clinical laboratory tests and disease management services
associated with cardiovascular disease. In addition, Celera develops, manufactures and oversees the commercialization of
molecular diagnostic products, and has licensed other relevant diagnostic technologies developed to provide personalized
disease management in cancer and liver diseases.
Under the terms of the definitive merger agreement, the Company, through a wholly-owned subsidiary, commenced a
cash tender offer to purchase all of the outstanding shares of common stock of Celera for $8 per share in cash. On May 4, 2011,
the Company announced that as a result of the tender offer, the Company had a controlling ownership interest in Celera. On
May 17, 2011, the Company completed the acquisition by means of a short-form merger, in which the remaining shares of
Celera common stock that had not been tendered into the tender offer were converted into the right to receive $8 per share in
cash. The Company has accounted for the acquisition of Celera as a single transaction, effective May 4, 2011.
Through the acquisition, the Company acquired all of Celera's operations. The Company financed the all-cash
purchase price of $670 million and related transaction costs with borrowings under its existing credit facilities and cash on
hand. Of the total cash purchase price of $670 million, $669 million was paid through December 31, 2013. Accounts payable
and accrued expenses at both December 31, 2013 and 2012 included a liability of $1 million representing the remaining merger
consideration related to shares of Celera which had not been surrendered as of December 31, 2013 and 2012.
For the year ended December 31, 2011, transaction costs of $9 million were recorded in selling, general and
administrative expenses. Additionally, for the year ended December 31, 2011, financing related costs of $3 million were
recorded in interest expense, net.
The acquisition of Celera was accounted for under the acquisition method of accounting. As such, the assets acquired
and liabilities assumed are recorded based on their estimated fair values as of the date the Company acquired its controlling
ownership interest in Celera. The consolidated financial statements include the results of operations of Celera subsequent to the
Company acquiring its controlling ownership interest.
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(in millions unless otherwise indicated)