GE Healthcare signs definitive agreement to acquire Clarient

GE Healthcare, a unit of General Electric Company (NYSE: GE), and Clarient, Inc. (Nasdaq: CLRT) announced today that they have entered into a definitive agreement for GE Healthcare to acquire Clarient, a leading player in the fast-growing molecular diagnostics sector.  Clarient's technologies, combined with GE Healthcare's strengths in diagnostic imaging, are expected to accelerate the development of new integrated tools for the diagnosis and characterization of cancer.  A subsidiary of GE will commence a tender offer for all outstanding common and preferred shares of Clarient at $5.00 per common share and $20.00 per preferred share, in each case payable in cash.

Molecular diagnostics provide precise information about a patient's cancer and can help doctors decide on the best treatment.  The rapid increase in the incidence of cancer worldwide, together with advances in specific cancer-focused therapies, is driving significant demand for molecular diagnostics.  The global demand for cancer-profiling products and services is predicted to grow from $15 billion in 2009 to an estimated $47 billion by 2015*.  Since 2005, Clarient's revenues have grown at a 68 percent compounded annual growth rate.

John Dineen, President and CEO of GE Healthcare, said, "GE Healthcare has built a world-class set of diagnostic, information and life science technologies.  We are experiencing solid growth in the core business this year and we see that growth continuing into 2011. Adding Clarient's leading technology to our portfolio will accelerate our expansion into cancer diagnostics and therapy selection tools, while strongly enhancing our current diagnostic and life sciences offerings.  We believe we can build a $1 billion-plus business by developing integrated diagnostic solutions for cancer and other diseases.

"GE and Clarient share a vision that through the integration of our diagnostic technologies we can help pathologists and oncologists make more confident clinical decisions, bring improvements in the quality of patient care and lower the costs of disease management," Dineen said.

Ron Andrews, CEO and Vice Chairman of Clarient, said, "The combination of Clarient's people, technologies and services with the resources, brand value, technical capabilities and global reach of GE Healthcare is a tremendous opportunity for the highly talented Clarient team. We will now have access to the resources we need to accelerate our development plans.  We are proud of the progress we have made in bringing our molecular diagnostic technologies to market, and joining with GE Healthcare will allow us to realize our ambitious plans and actualize our goal of becoming one of the industry's most relevant companies in the management of cancer."

Clarient provides pathologists and oncologists with access to key diagnostic tests that shed light on the complex nature of various cancers.  Clarient is focused on developing novel, proprietary diagnostic markers and tests for the profiling of breast, prostate, lung, colon and blood-based cancers, to help clinicians make informed decisions on how best to treat their patients.  Given the increasing importance of more targeted cancer diagnostics, Clarient is well positioned to bring differentiated, added-value molecular diagnostic products and services to market.  

Transaction Details

Commenting on the transaction, Andrews added, "We are very excited about becoming part of the GE Healthcare family, and we believe that the consideration being paid to Clarient stockholders appropriately reflects the value that we have built at Clarient. This is good news for our stockholders, for the healthcare community, and for patients."

The Board of Directors of Clarient has approved the transaction and unanimously recommended that Clarient stockholders tender their shares in the transaction.   Stockholders holding approximately 47 percent of Clarient's current outstanding voting stock have agreed, among other things, to tender their shares in the proposed transaction.  GE Healthcare will acquire any Clarient shares not purchased in the tender offer in a second-step merger at the same price per share paid in the tender offer. The transaction values Clarient at approximately $580 million, net of cash and investments as of June 30, 2010.

The transaction is conditioned on the tender and acceptance of at least a majority of the fully diluted common shares of Clarient in the tender offer, regulatory approvals and other customary conditions, and is expected to close in late 2010 or early 2011.

Goldman, Sachs & Co. is acting as financial advisor and Latham & Watkins LLP is acting as legal counsel to Clarient on this transaction.  JP Morgan is acting as financial advisor and Sidley Austin LLP is acting as legal counsel to GE Healthcare on this transaction.  

*Source BCC Research "Cancer Profiling and Pathways: Technologies and Global Markets", September 2010