US medical testing firm LabCorp to buy Covance for $6.1 bn

US medical testing firm LabCorp yesterday announced plans to buy medical research firm Covance for $6.1 billion in cash and stock in order to create a healthcare diagnostics giant.

Under the deal approved by the boards of both companies, LabCorp has offered to pay a total of $105.12 per share, a 32-per cent premium to Covance's Friday closing price. LabCorp would pay Covance shareholders $75.76 in cash and 0.2686 LabCorp shares for each Covance share, giving Covance investors around 15.5 per cent of the combined company.

New Jersey-based Covance is a drug development and nutritional analysis company with annual revenues of around $2.5 billion. It has over 12,500 employees in over 60 countries.

LabCorp, also known as Laboratory Corporation of America Holdings, is a pioneer in commercialising new diagnostic technologies and offers more than 4,000 tests ranging from routine blood analyses to reproductive genetics to companion diagnostics.

The North Carolina-based company has annual revenues of $5.8 billion, over 34,000 employees worldwide, and more than 220,000 clients,

"This transaction provides LabCorp with immediate scale and a comprehensive market-leading platform in the $141 billion biopharmaceutical research and development market, while at the same time achieving the new sources of revenue, broader payor mix and greater international presence we have long pursued," said LabCorp chairman and CEO David King.

''Covance generates more safety and efficacy data for the approval of innovative medicines than any other company in the world, and LabCorp has longitudinal diagnostic data from more than 75 million patients, said, Covance chairman and CEO Joe Herring.

''This combination leads the way to more cost-effective healthcare by improving the safety and efficacy of drug therapies, enabling accurate patient diagnostics, and advancing evidence-based medicines which will enable our clients to substantiate the value of their products and services to patients and payors,'' he added.