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LabOne to Be Acquired by Quest Diagnostics

The takeover price represents a 16% premium to Friday's close.
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Quest Diagnostics

(DGX) - Get Quest Diagnostics Incorporated Report

agreed Monday to acquire



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, broadening its medical testing offerings to businesses and insurance companies.

Quest says the deal is worth $934 million including debt assumption. The company will pay $43.90 in cash for each outstanding share of LabOne, about 16% above their closing price of $37.64 on Friday.

LabOne sells health-screening and risk-assessment services to life insurance companies, clinical diagnostic testing services to health care providers and narcotics testing for businesses. Quest is one of the country's top suppliers of diagnostic testing services, such as X-rays.

The transaction, which should close in the fourth quarter, isn't expected to have a material impact on Quest's 2005 per-share earnings. Quest expects the deal to create annual cost savings of about $30 million once the two companies are integrated within two years of closing.

"This acquisition will generate significant synergies, solidify our leadership position in diagnostic testing by expanding access for physicians and patients, and strengthen our drugs-of-abuse testing business," Quest said. "In addition, it will establish us as the leader in a new, testing-related business, providing health screening and risk-assessment services to the life insurance industry."