Quest Diagnostics to Acquire AmeriPath for $2B

Quest Diagnostics, a medical diagnostics testing, information and services provider, has signed a definitive agreement to acquire privately held AmeriPath, a national diagnostic testing company, in an all cash deal valued at $2 billion (which includes about $770m in debt). AmeriPath had over $800m in revenues last year. EPS impact is expected be minimal in '07 and modestly accretive in '08. The deal is expected to close in Q2 subject to regulatory approval. In a press release, Quest said it plans to use debt financing from Morgan Stanley to pay for the transaction and refinance debt from both the AmeriPath and earlier HemoCue transactions. AmeriPath was taken private in 2003 for $658.8m, by Welsh, Carson, Anderson & Stowe. Quest reports Q1 earnings on Thursday before the market opens. Its shares are trading down about 2.2% to $53.10 in pre-market trading on light volume of about 6,500 shares. Quest closed Friday +2.9% to $54.31 and has traded between $48.07 - $64.69 over the past year.

Sources: Press release, The Wall Street Journal
Commentary: Jim Cramer's take on Quest Diagnostics • Top Six Socially Responsible Healthcare and Pharmaceutical Firms • Quest Diagnostics Gets Much Cheaper - But is It Now Cheap? [Oct. '06]
Stocks/ETFs to watch: Quest Diagnostics (DGX). Competitors: Laboratory Corporation of America Holdings (LH), Bio-Reference Laboratories (BLRI). ETFs: iShares Dow Jones US Healthcare Provider (IHF)

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