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US Oncology Going Private

US Oncology (USON) agreed to be taken private at $15.05 a share cash by buyout giant Welsh Carson Anderson & Stowe.

The price is an 18% premium to the Friday close of $12.70 and should spark the shares' second double-digit percentage gain in five months after they went from $7.80 to $10.99 on Oct. 31, 2003, following positive quarterly earnings. The 52-week range is $6.60 to $14.

Two analysts surveyed by Thomson One Analytics produced a mean earnings estimate for US Oncology of 92 cents a share for 2004, implying a profit multiple of 16.3 in Welsh Carson's price. It's slightly less than the $2 billion in revenue the company did last year.

The total value of Monday's buyout is $1.7 billion including stock options and assumed debt. Welsh Carson already owns about 14.5% of US Oncology's common stock. Several members of the company's current management team, including CEO Dale Ross, will continue as employees of the private company and "be given the opportunity to purchase equity securities and have the benefits of being granted restricted stock and stock options in such entity and participation in other incentive plans."

The buyout is the latest in a series of going-private transactions that have occurred despite a yearlong bull market. Extended Stay America (ESA) has agreed to be bought by Blackstone Group in a deal worth about $19.63 a share while drugstore chain Duane Reade (DRD) is being bought by a fund started by the Texas Bass family for $17 a share. AMF Bowling (ABWI) is being taken out at $25 a share by Chicago's Code Hennessy.

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