LabCorp 2012 Annual Report Download - page 35

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LABORATORY CORPORATION OF AMERICA
Notes to Consolidated Financial Statements
and plan of merger, including the acquisition in the tender
offer of a majority of Orchid’s fully diluted shares and the
expiration or early termination of the waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (“HSR Act”). The Company received lawsuits
filed by putative classes of shareholders of Orchid in
New Jersey and Delaware state courts and federal court in
New Jersey alleging breaches of fiduciary duty and/or other
violations of state law arising out of the proposed acquisition
of Orchid. Both Orchid and the Company were named in the
lawsuits. The lawsuits were subsequently dismissed.
On December 8, 2011, the Company announced that
it had reached an agreement with the U.S. Federal Trade
Commission allowing the Company to complete its
acquisition of Orchid. Under the terms of the proposed
consent decree that was accepted by the FTC for public
comment, the Company was required to divest certain
assets of Orchid’s U.S. government paternity business
following closing of the acquisition. On December 16, 2011,
the Company sold those assets to DNA Diagnostics
Center, a privately held provider of DNA paternity testing.
The Company completed its acquisition of Orchid on
December 15, 2011. It has recorded a $2.8 non-deductible
loss on the divestiture of Orchid’s U.S. government
paternity business in Other Income and Expense in the
accompanying Consolidated Statements of Operations.
The Orchid purchase consideration has been allocated to
the estimated fair market value of the net assets acquired,
including approximately $28.8 in identifiable intangible
assets (primarily non-tax deductible customer relationships,
trade names and trademarks) with weighted-average useful
lives of approximately 12 years; $9.1 in deferred tax liabilities
(relating to identifiable intangible assets); net operating loss
tax assets of approximately $20.4, which are expected to
be realized over a period of 20 years; and a residual amount
of non-tax deductible goodwill of approximately $27.4.
During the twelve months ended December 31, 2011,
the Company also acquired various laboratories and related
assets for approximately $51.9 in cash (net of cash
acquired). These acquisitions were made primarily to extend
the Company’s geographic reach in important market areas
and/or enhance the Company’s scientific differentiation and
esoteric testing capabilities.
The partnership units of the holders of the noncontrolling
interest in the Company’s Ontario, Canada (“Ontario”)
subsidiary were acquired by the Company on February 8,
2010 for $137.5. On February 17, 2010, the Company
completed a transaction to sell the units acquired from the
previous noncontrolling interest holder to a new Canadian
partner for the same price. As a result of this transaction,
the Company recorded a component of noncontrolling
interest in other liabilities and a component in mezzanine
equity as the joint venture’s partnership agreement enabled
one of the holders of the noncontrolling interest to put its
remaining partnership units to the Company in defined
future periods, at an initial amount equal to the consider-
ation paid by that holder in 2010, and subject to adjustment
based on market value formulas contained in the agreement.
Upon the completion of these two transactions, the
Company’s financial ownership percentage in its Ontario
subsidiary remained unchanged at 85.6%. Concurrent with
the sale to the new partner, the partnership agreement for
the Ontario subsidiary was amended and restated with
substantially the same terms as the previous agreement.
On October 14, 2011, the Company issued notice to a
noncontrolling interest holder in its Ontario subsidiary of
its intent to purchase the holder’s partnership units in
accordance with the terms of the partnership agreement.
On November 28, 2011, this purchase was completed for a
total purchase price of $147.9 (CN$151.7) as outlined in the
partnership agreement (CN$147.8 plus certain adjustments
relating to cash distribution hold backs made to finance
recent business acquisitions and capital expenditures).
The purchase of these additional partnership units brought
the Company’s percentage interest owned to 98.2%.
Net sales of the Company’s Ontario subsidiary were
$335.1 (CN$334.7), $309.4 (CN$306.0) and $280.0 (CN$288.5)
for the twelve months ended December 31, 2012, 2011 and
2010, respectively.
On December 1, 2010, the Company acquired Genzyme
Genetics, a business unit of Genzyme Corporation, for
approximately $925.2 in cash (net of cash acquired). The
Genzyme Genetics acquisition was made to expand the
Company’s capabilities in reproductive, genetic, hematology-
oncology and clinical trials central laboratory testing, enhance
the Company’s esoteric testing capabilities and advance the
Company’s personalized medicine strategy.