Word of a crucial scientific study helped medical-services company Quest Diagnostics negotiate a nearly $200 million discount in its deal to acquire Celera Corp. Yet one puzzle remains unsolved. Just how did Quest learn about the study months prior to its official publication?
Quest last month announced a deal to acquire the genetic-testing firm for $8 a share, or $671 million. But according to a recent Quest filing with the Securities and Exchange Commission, it was on the verge of paying $10.25 last year when it had already spent months conducting due diligence.Why the lower price? One reason, according to a filing by Quest, was that it received an advance copy of an unpublished study that had negative implications for one of Celera’s genetic tests, referred to as KIF6. Quest received the study in late June, it says.
A few days later, according to a separate filing by Celera, its chief executive Surya Mohapatra told Celera CEO Kathy Ordonez he would not proceed with the deal “given the uncertainties surrounding the impact on the company’s business of the manuscript and a purported accompanying negative editorial.”
A few days later, Quest told Celera any future offer would be at a lower price. The study was published months later, on Oct. 7 in the Journal of the America College of Cardiology.
The deal talks were still under wraps. Over the next month, Celera shares fell more than 10% while the biotechnology index was flat. In late November Quest made a bid of $7 a share, which was later revised to $8.
While both companies outlined this history broadly in separate filings, it’s unclear how Quest obtained a draft of the study ahead of time...
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