Quest Diagnostics to purchase LabOne
Lenexa ? Quest Diagnostics Inc. said Monday it planned to acquire LabOne Inc. in a deal worth $934 million.
Lyndhurst, N.J.-based Quest, the nation’s leading medical testing company, said it would pay LabOne stockholders $43.90 per share, a 16.6 percent premium to the LabOne’s closing price of $37.64 on Friday. Quest said the price included the settlement of about $132 million in LabOne’s convertible debt.
Surya Mohapatra, Quest’s chairman and chief executive officer, said the acquisition would strengthen the company’s existing drug-testing business and allow it to start providing risk assessment and health screening services to the life insurance industry.
Lenexa-based LabOne on Monday reported a 24 percent increase in second-quarter earnings to $7.8 million, or 44 cents per share, compared with $6.2 million, or 36 cents per share, during the same period a year ago. Revenues increased 9 percent to $127.6 million.
The transaction, which still requires approval from regulators and LabOne shareholders, is expected to close in the fourth quarter. Quest said it expected cost savings of about $30 million within the next two years.
Thomas Grant, LabOne’s chairman and CEO, will join Quest, leading the combined company’s testing service for employers and risk-assessment service for insurance companies.
LabOne reported 2004 revenue of $468 million. The company employs 3,100 workers in Lenexa, Cincinnati and Lee’s Summit, Mo.
Quest has 39,000 employees and took in revenue of $5.1 billion in 2004.
Shares of LabOne closed up $5.18, or 13.8 percent, at $42.82 in trading Monday on the New York Stock Exchange. Shares of Quest closed up $1.71, or 3.6 percent, at $49.21.