QUEST DIAGNOSTICS COMPLETES ACQUISITION OF
SMITHKLINE BEECHAM CLINICAL LABORATORIES
TETERBORO, N.J., AUGUST 16, 1999 Quest Diagnostics Incorporated
(NYSE: DGX) announced today that it has completed the acquisition of the
clinical laboratory operations of SmithKline Beecham plc (NYSE: SBH) for
approximately $1.3 billion in cash and stock.
"Starting today, the new Quest Diagnostics is the clear industry leader
in diagnostic testing, information and services, well positioned for profitable
growth," said Kenneth W. Freeman, Chairman and Chief Executive Officer
of Quest Diagnostics. "As we move quickly to integrate our two companies,
our number one priority is to improve value for our customers through
enhanced quality and services."
Pursuant to the acquisition, which was approved by Quest Diagnostics
shareholders on June 29, Quest Diagnostics acquired SmithKline Beecham
Clinical Laboratories (SBCL), including its domestic and foreign clinical
testing operations, clinical trials testing, corporate health services,
and laboratory information products businesses. SBCL's national testing
and service network consists of regional laboratories, specialty testing
operations, rapid-turnaround or "STAT" laboratories, and patient service
centers. SBCL had 1998 revenues of $1.6 billion.
As part of the transaction, Quest Diagnostics has granted SmithKline
Beecham certain non-exclusive rights for use of its clinical laboratory
information database. In connection with such rights, Quest Diagnostics
will receive license fees and a minority interest in a company to be formed
by SmithKline Beecham, which will sell health care information products
and services through various channels, including the Internet.
In addition, SmithKline Beecham and Quest Diagnostics have entered into
a long-term contract under which Quest Diagnostics will be the exclusive
provider of testing to support SmithKline Beecham's clinical trials testing
requirements worldwide.
SmithKline Beecham, which received approximately $1.0 billion in cash
and 12.6 million newly issued shares of Quest Diagnostics' common stock,
holds approximately 29% of the outstanding shares of Quest Diagnostics,
and has agreed to certain standstill provisions in connection with its
ownership. In addition, SmithKline Beecham will indemnify Quest Diagnostics
for potential liability arising from certain government and private claims
against SBCL.
Designees of SmithKline Beecham occupy two newly created seats on the
Quest Diagnostics Board of Directors. The new Directors are William R.
Grant and John O. Parker. Mr. Grant is Chairman of Galen Associates, a
health care venture investment firm based in New York, and a former Vice-Chairman
and member of the Board of Directors of SmithKline Beecham plc. Mr. Parker
is Senior Vice President and Director, Information Resources at SmithKline
Beecham plc, where he is responsible for the strategy, planning and organization
of all information technology worldwide.
The acquisition is expected to accelerate Quest Diagnostics' earnings
growth rate, generate savings exceeding $100 million annually after three
years, and be accretive to earnings in 2000, before anticipated charges
related to the transaction.
Quest Diagnostics expects the transaction to produce a broad range of
benefits for customers, including: improved quality, convenience and accessibility;
expanded test development for health care consumers; and dynamic laboratory
data and information products to help providers and insurers better manage
their patients' health.
Quest Diagnostics is the nation's leading provider of diagnostic testing,
information and services to physicians, hospitals, managed care organizations,
employers and government agencies with annualized revenues of more than
$3 billion. The wide variety of tests performed on human tissue and fluids
help doctors and hospitals diagnose, treat and monitor disease. Its Nichols
Institute unit conducts research, specializes in esoteric testing using
genetic screening and other advanced technologies, and manufactures and
distributes diagnostic test kits and instruments. Quest Diagnostics is
one of the leading providers of testing to support clinical trials of
new pharmaceuticals worldwide. Quest Informatics collects and analyzes
laboratory, pharmaceutical and other data to help large health care customers
better manage the health of their patients. QuestNet is an innovative
new product offering that provides network management services to large
buyers of health care services. Additional company information can be
found on the Internet at: www.questdiagnostics.com.
The statements in this press release which are not historical
facts or information may be forward-looking statements. These forward-looking
statements involve risks and uncertainties that could cause the outcome
to be materially different. Certain of these risks and uncertainties are
listed in the Quest Diagnostics Incorporated 1998 Form 10-K and subsequent
filings.
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