SOURCE: Bernstein Litowitz Berger & Grossmann LLP

April 18, 2011 14:10 ET

New Orleans Employees' Retirement System Announces Settlement of Celera Takeover Litigation

NEW YORK, NY--(Marketwire - Apr 18, 2011) - The New Orleans Employees' Retirement System ("NOERS"), the Court-appointed lead plaintiff in the case pending in Delaware Chancery Court captioned In re Celera Corporation Shareholder Litigation, Consol. C.A. No. 6304-VCP, is pleased to announce that it has approved a settlement of the action challenging the acquisition of diagnostic testing company Celera Corporation (NASDAQ: CRA) by Quest Diagnostics Incorporated (NYSE: DGX).

As part of the settlement, Celera and Quest agreed to alter key features of their merger agreement that NOERS, on behalf of all Celera shareholders, had asserted harmed the corporate sales process and inhibited obtaining maximum value for shareholders.

As part of the settlement, Alameda, CA-based Celera and Quest have agreed to:

1) Amend the non-solicitation provision of the merger agreement to permit Celera to release third parties currently subject to confidentiality agreements with Celera from any standstill restrictions contained in such agreements;

2) Release any third party currently subject to confidentiality agreements with Celera that were entered into as a result of Celera's sales process from any standstill restrictions contained in such agreements;

3) Lower any break-up fee the company may be obliged to pay by one-third, from $23.45 million to $15.6 million;

4) Extend the initial expiration date of the tender offer from April 25, 2011 to May 2, 2011, to give shareholders time to analyze the transaction and to provide potential suitors no longer bound by standstill restrictions time to consider a competing bid; and

5) Amend its solicitation/recommendation statement on Schedule 14D-9 to provide shareholders with additional information about the proposed transaction, including certain analyses performed by Celera's financial advisor in assessing the fairness of Quest's $8.00 per share offer and providing extensive information about the potential value of Celera's developmental drug portfolio.

Over the course of an extensive and expedited discovery process, NOERS and Court-appointed Lead Counsel, Bernstein Litowitz Berger & Grossmann LLP, Motley Rice LLC and Grant & Eisenhofer, P.A., learned about and challenged a provision agreed to by certain participants in the company's prior sales process that prohibited those participants from seeking a waiver of the standstill restrictions that were a condition to gaining access to diligence materials. This contractual prohibition, asserted NOERS and its counsel, was unenforceable and constituted a violation of Delaware law. As part of the settlement, the standstill provisions are being waived, effectively eliminating the challenged prohibition.

Jerome D. Davis, Chairman of the Board of the New Orleans Employees' Retirement System, stated: "In this case, we uncovered what we believe is a bad corporate governance practice relating to standstill provisions that is unfortunately more widespread than just this instance. The System took a firm stand against these prohibitions for the benefit of Celera shareholders, and will continue to challenge these and similar unenforceable restraints on competitive bidding until corporate directors and their advisors cease using them and adhere to more shareholder-focused transaction-related practices."

The settlement is still subject to the satisfaction of various conditions, including approval by the Delaware Court of Chancery.

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