Merger Agreement

6 Months Ended

Jun. 30, 2012

Merger Agreement [Abstract]

Merger Agreement [Text Block]

6.   MERGER AGREEMENT

On June 3, 2012, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Laboratory Corporation of America Holdings ("Parent" or "LabCorp") and Mercer Acquisition Corp., a wholly owned subsidiary of Parent ("Merger Sub").

The Merger Agreement provides for the merger of Merger Sub with and into the Company (the "Merger"), with the Company surviving the Merger as a wholly owned subsidiary of Parent.  In the Merger, each outstanding share of common stock, par value $0.15 per share, of the Company, other than any dissenting shares, shares held by Parent,  Merger Sub, the Company or any of their respective subsidiaries and treasury shares, will be cancelled and converted into the right to receive $27.00 in cash, without interest.

The closing of the Merger is subject to customary closing conditions, including adoption of the Merger Agreement by the Company's stockholders and regulatory approvals.  The closing is not subject to any financing condition or a vote of Parent's stockholders.  On July 13, 2012, the Company announced that the Federal Trade Commission has granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 applicable to the acquisition of the Company by LabCorp.  Assuming approval of the Company's stockholders, the transaction is expected to close in the third quarter of 2012.

Under the Merger Agreement, the Company may not solicit competing proposals or, subject to exceptions that permit the Company's Board of Directors to take actions required by their fiduciary duties, participate in any discussions or negotiations regarding alternative business combination transactions.

The Merger Agreement also includes customary termination provisions for both the Company and Parent and provides that, in connection with the termination of the Merger Agreement under specified circumstances, including in connection with the Company accepting an unsolicited acquisition proposal determined by the Board of Directors to be a Superior Proposal (as defined in the Merger Agreement), the Company may be required to pay to Parent a termination fee of $8.2 million.

Under certain circumstances, the Merger Agreement also provides for Parent to reimburse the Company for expenses incurred upon termination of the Merger Agreement if the Merger is not completed by December 31, 2012, in an amount not to exceed $750,000.

The Merger Agreement contains customary representations, warranties and covenants by the Company, Parent and Merger Sub, including covenants regarding operation of the business of the Company and its subsidiaries prior to the closing.

Results for the three and six month periods ended June 30, 2012 include approximately $515,000 of expenses attributable to the planned Merger.  These costs are included in selling, general and administrative on the income statement.

For further information regarding the Merger, see the Definitive Proxy Statement of the Company, as filed with the Securities and Exchange Commission on June 27, 2012, and the additional proxy soliciting materials filed by Company subsequent to June 27, 2012.