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LabCorp to use revolver, bonds for $925 million acquisition of Genzyme
By Jennifer Lanning Drey
Portland, Ore., Sept. 13 - Laboratory Corp. of America Holdings will use a combination of cash on hand, its revolving credit facility and the issuance of bonds to acquire Genzyme Genetics in an all-cash transaction valued at $925 million, Brad Hayes, LabCorp's chief financial officer, said during a company conference call held Monday.
"If you asked me to put a number on it, I would be thinking somewhere around a third from [cash and the revolver] and two-thirds from a longer-term debt instrument," Hayes later said about the financing.
Net of expected income tax benefits, less acquisition-related expenses, the acquisition has a cash cost to LabCorp of approximately $795 million.
LabCorp will continue to pursue other strategic uses of its cash, Hayes noted.
The company has obtained a financing commitment from Citi to provide debt financing for the transaction, according to a company news release.
The acquisition is subject to customary closing conditions, and LabCorp hopes to close the transaction by the end of the year, Hayes said.
LabCorp chief executive officer David E. King said the acquisition of Genzyme will allow the company to grow revenues in its key strategic focus areas of esoteric testing and personalized medicine.
"This strategic combination will position us to capitalize on two emerging trends - the increasing importance of diagnostics to health care and the evolution of personalized medicine into the mainstream of patient care," King said.
Burlington, N.C.-based LabCorp develops diagnostic technologies through genomic testing.
Genzyme Genetics is a unit of Cambridge, Mass.-based biotechnology company Genzyme Corp.
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