Source: Daily Deal
 
Genzyme Corp. won court approval Wednesday, March 31, to pay $215 million in cash to buy nearly all the assets of Impath Inc.
 
Judge Prudence Carter Beatty in U.S. Bankruptcy Court for the Southern District of New York in Manhattan gave the go-ahead on a deal that's aiming to close by the end of April, said George Davis, New York debtor counsel at Weil, Gotshal & Manges LLP.
 
The sale gives Genzyme the Impath Physician Services Inc. and Impath Analystical Services Business divisions of the New York cancer testing company. Genzyme must also assume a limited amount of liabilities.
 
All 10 objections to the sale were resolved prior to the hearing, Davis said.
 
The two Impath divisions accounted for about 95% of the company's revenue, leaving it with just three small units still up for sale, according to Michael Lubowitz, Impath's M&A counsel at Weil, Gotshal.
 
An auction set for March 30 was cancelled when no other bidders challenged Genzyme's stalking-horse offer.
 
The Cambridge, Mass.-based biotech would have been entitled to a break-up fee of 2.5% of the $215 million purchase price if it had lost out to a rival bidder. Any other buyer would also had to pay up to $750,000 for Genzyme's expenses.
 
Both Genzyme and Impath can terminate the deal if it isn't completed by July 1, filings show.
 
Genzyme plans to make the Impath units part of a proposed $1 billion all-stock acquisition of San Antonio-based Ilex Oncology Inc., said Paul Kinsella, the buyer's adviser in Boston at Ropes & Gray LLP.
 
Those deals would expand Genzyme's cancer research efforts by giving it cancer testing labs in New York, Los Angeles and Phoenix.
"A lot of the senior management is no longer at Impath since its bankruptcy. But Genzyme is particularly intent on keeping its experienced staffers, particularly its pathologists," he said.
 
"Impath's pathologists are considered to be top-notch due to their background in solid-tumor and blood-based cancer testing and are a key component of the sale."
 
An official equity committee was formed after disgruntled shareholders alleged that Impath had not been adequately weighing the option of a stand-alone reorganization. The shareholders feared that Impath might hold a fire-sale despite its financial turnaround significantly enhanced its value.
"We're not challenging the sale because we're satisfied that it has been properly marketed," said John Jerome, Philadelphia counsel for the equity committee at Saul Ewing LLP.
 
But Impath's shareholders weren't always so happy with the company's sale plans.
 
Dissident shareholders, who owned 33.78% of Impath's stock, formed an ad hoc equity committee and then won approval to make it official. They had wanted Impath to study a stand-along reorganization after the company began generating positive cash-flow soon after its filing.
 
Impath's stock price plunged 85% before its filing after announcing it was under investigation by the Securities and Exchange Commission for accounting irregularities.
 
The company's price dipped to $1.85 at filing before climbing above $5 four months later and the shareholders thought there might be more in it for them under reorganization. The price was trading Wednesday between $5.55 and $5.80 after hitting $7 on March 1.
 
Durc Savini and David Ying are shopping Impath's assets at New York investment bank Miller Buckfire Lewis Ying & Co. LLC. Holly Etlin is chief restructuring officer in New York at Crossroads LLC.
 
Kinsella and Chris Comeau are advising Genzyme in Boston at Ropes & Gray along with Matthew Miller at Bank of America Corp. in New York.
Davis is debtor counsel and Lubowitz is Impath's M&A attorney at Weil, Gotshal.