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California

Quest May Sell Assets in Bid for Rival

The medical testing firm offers to divest itself of California businesses to gain OK to buy Unilab.

January 07, 2003|From Bloomberg News

Quest Diagnostics Inc., the largest U.S. medical testing company, said Monday that it is offering to sell businesses in California to win U.S. approval for its $925-million purchase of rival Unilab Corp.

The Federal Trade Commission has raised concerns that without such a sale the combined company would be able to raise prices for diagnostic tests. Quest repeatedly has extended its offer to purchase Unilab, which operates independent medical labs in California, while it negotiates with antitrust enforcers.

"Quest doesn't want to lose this opportunity to become the major private laboratory in California," said Tom Burnett, president of research firm Merger Insight.

The proposed purchase of Unilab, announced last April, would increase Quest's business in California, one of the fastest-growing markets.

Quest said Monday that it has proposed selling contracts to provide laboratory services to physicians' groups in Northern California.

Quest spokesman Gary Samuels declined to identify the prospective buyer of the contracts, patient-service centers and testing labs.

Quest said last month that it would reduce its purchase price for Unilab by about 5% to account for the possible divestitures.

The companies said Monday that they had signed the agreed-upon price reduction and extended the termination date for the acquisition to Jan. 31.

Analysts have said Laboratory Corp. of America Holdings, the No. 2 U.S. medical laboratory operator, is the likely buyer of the assets Quest would divest. LabCorp, which has said it wants to expand in California, has declined to comment on whether it is bidding on the assets.

LabCorp recently outbid Quest to purchase Dianon Systems Inc., which it said it would acquire for $598 million, subject to shareholder approval this month.

Unilab shares rose 70 cents to close at $19.70 on Nasdaq. Quest's shares rose $1.34 to close at $60.56 on the New York Stock Exchange.

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