SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
February 17, 1999 (February 9, 1999) Date of Report (Date
of earliest event reported)
Quest Diagnostics Incorporated
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-12215 16-1387862
(Commission File Number) (IRS Employer Identification No.)
One Malcolm Avenue, Teterboro, NJ 07608
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (201) 393-5000
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Item 5. Other Events.
The information contained in Exhibit 20 hereto is incorporated herein by
reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit Number Description
20 The Registrant's press release dated February 9, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
February 17, 1999
Quest Diagnostics Incorporated
By /s/ Robert A. Hagemann
Robert A. Hagemann
Vice President and Chief Financial Officer
EXHIBIT 20
QUEST DIAGNOSTICS TO ACQUIRE
SMITHKLINE BEECHAM CLINICAL LABORATORIES FOR $1.3 BILLION
-- Transaction will Improve Quality, Access and Convenience for Customers --
TETERBORO, N.J., FEB. 9, 1999--Quest Diagnostics Incorporated (NYSE: DGX), a
leading provider of diagnostic testing, information and services, announced
today that it has signed a definitive agreement to acquire the clinical
laboratory operations of SmithKline Beecham plc (NYSE: SBH) for approximately
$1.3 billion in cash and stock.
Under the terms of the agreement, which was approved by the Boards of Directors
of both companies, Quest Diagnostics will acquire SmithKline Beecham Clinical
Laboratories (SBCL), including its 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 and its Genetics Testing Center, as
well as a number of rapid-turnaround or "STAT" laboratories, and patient service
centers. SBCL had 1998 revenues of $1.6 billion. As part of the transaction,
SmithKline Beecham and Quest Diagnostics will enter 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.
Pursuant to the agreement, SmithKline Beecham will receive approximately $1.0
billion in cash and 12.6 million newly issued shares of Quest Diagnostics'
common stock. At closing, SmithKline Beecham will hold approximately 29.5% of
the outstanding shares of Quest Diagnostics. 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.
"In the rapidly changing world of health care, this transaction will enable us
to become a more successful company by providing higher value for customers in a
cost-effective way," said Kenneth W. Freeman, Chairman and Chief Executive
Officer of Quest Diagnostics. "As with consolidations occurring elsewhere in the
healthcare industry, including physician practices, hospitals, managed care
organizations and pharmaceutical companies, this acquisition is a necessary
response to widespread pressure to provide an increased level of services for
our customers in a cost-sensitive environment."
Quest Diagnostics expects the transaction to produce a broad range of benefits
for customers, including: improved quality, convenience and accessibility;
expanded test development for healthcare consumers; and more dynamic laboratory
data and information products to help providers and insurers better manage their
patients' health.
"This acquisition will enable Quest Diagnostics to dramatically improve patient
care as we move into the 21st Century by providing the resources and critical
mass needed to accelerate the development of database and information tools,"
said Mr. Freeman.
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The transaction, which is expected to be completed early in the second half of
1999, is subject to the satisfaction of customary conditions, including approval
by Quest Diagnostics stockholders, regulatory review and receipt of financing
for the cash portion of the purchase price. Merrill Lynch and Bank of America
have jointly committed to provide full financing. As part of the transaction,
SmithKline Beecham will receive two seats on the Quest Diagnostics Board of
Directors and has agreed to certain standstill provisions in connection with its
ownership of Quest Diagnostics common stock. SmithKline Beecham will also
indemnify Quest Diagnostics for potential liability arising from certain
government and private claims against SBCL.
Quest Diagnostics is one of the nation's leading providers of diagnostic
testing, information and services to physicians, hospitals, managed care
organizations, employers and government agencies with 1998 revenues of $1.5
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, performs clinical studies testing, and
manufactures and distributes diagnostic test kits and instruments. Quest
Informatics collects and analyzes laboratory, pharmaceutical and other data to
help large healthcare customers identify and monitor patients who are at-risk
for certain diseases. 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 1997 Form 10-K and subsequent filings.
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