Covance Inc., the Carnegie Center-based drug development services company, has agreed to be purchased by LabCorp, a Burlington, North Carolina-based medical testing services company, for $6.1 billion.
The deal, which has yet to be approved by regulators and shareholders, will see LabCorp buy Covance for cash and stocks valued at $105 per Covance share, a 32 percent premium over the stock price at the time of the announcement. The combined company will be the world’s largest healthcare diagnostics firm.
LabCorp said in a press release that it expects to achieve $100 million in “synergies” over the next three years. According to the release, Covance will maintain its brand and Princeton operational headquarters, with CEO Joe Herring continuing to lead Covance.
Covance’s Route 1 footprint includes two buildings at Carnegie Center, one of which includes the company’s corporate headquarters. The company is a contract research organization, best known for running clinical trials of new drugs on behalf of pharmaceutical companies. The company says it served more than 1,000 biopharmaceutical companies in 2013.
Covance also conducts animal trials of drugs and products, as well as lab testing services to other industries. It employs more than 12,500 people in 60 countries and reported revenues of $2.5 billion in 2013. According to its annual report, Covance is the world’s largest provider of central laboratory services, with large central laboratories in Indianapolis, Indiana, Singapore, Switzerland, Japan, and China.
Covance was founded in 1968 as Environmental Sciences Corporation. By 1996, the company was a division of Corning, which spun off Covance into its own company headquartered in Princeton.
The corporate history of Covance includes an odd footnote. In December 1989, the company’s animal testing unit imported macacque monkeys from the Philippines. Several of the monkeys turned out to be infected with a form of the Ebola virus. The strains were not infectious to humans, and the monkey house in Reston, Virginia, was torn down some time in the mid-1990s.
Covance did not respond to a request for an interview by press time.
LabCorp operates a nationwide network of more than 1,700 clinical laboratories with more than 34,000 employees. The company reported $5.8 billion in revenue in 2013.
The press release said the combined company would leverage technologies to improve patient recruitment for clinical trials, make trials more efficient, and deliver data faster to drug sponsors, physicians, and patients. Covance has developed risk-based patient monitoring tools for use in clinical trials that will be used to analyze LabCorp clinical laboratory patients. The combined company also plans to use information that LabCorp has gathered on its 75 million patients to improve clinical trials.
Covance Inc. (CVD), 206 Carnegie Center, Princeton 08540-6681; 609-452-8550; fax, 609-452-9375. Joe Herring, CEO. www.covance.com.