Quest Buying AmeriPath

It will pay $1.23 billion.
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Quest Diagnostics (DGX) - Get Report agreed to pay $1.23 billion for AmeriPath, a closely held diagnostics company owned by Welsh Carson Anderson & Stowe.

Lyndhurst, N.J.-based Quest said it will also take on $770 million in debt. AmeriPath has annual revenue of $800 million, Quest said.

"This acquisition will establish our leading position in cancer diagnostics with a focus on dermatopathology, anatomic pathology and molecular diagnostics," said Quest CEO Surya N. Mohapatra. "AmeriPath is respected for its leadership in dermatopathology and anatomic pathology, two of the fastest-growing segments in diagnostic testing. Additionally, its Specialty Laboratories will further strengthen our hospital and esoteric testing business. The acquisition will accelerate Quest Diagnostics' revenue and earnings growth and provide compelling benefits for patients, physicians, hospitals and payers through enhanced customer service and expanded test offerings."

Quest Diagnostics intends to pay for the transaction, refinance AmeriPath's existing debt, and pay down the debt from the HemoCue acquisition completed earlier this year with the proceeds of a new $1 billion one-year bridge loan and a new five-year $1.5 billion term loan, both committed to be underwritten by Morgan Stanley. The bridge loan is expected to be refinanced shortly after the closing.