Diagnostic giant LabCorp ($LH) will snatch up laboratory testing services and device company Medtox Scientific ($MTOX) for a cool $241 million in cash in a deal announced June 4. The reason: to boost its toxicology testing offerings.
Medtox investors responded strongly to the $27 per share offer, itself a huge premium over the company's previous closing of $19.70 on June 1. The company's stock price soared more than 35% to $26.72. LabCorp, meanwhile, saw its stock jump less than half of a percent, to $82.92. Both companies' boards of directors already voted unanimously to approve the agreement, which is expected to close in the third quarter of 2012, pending various regulatory requirements and approval by Medtox's shareholders.
LabCorp, which is focused on diagnostics and genomic testing, wants to boost its toxicology testing business, and the deal to buy Medtox, a forensic and clinical laboratory, seems to be a good fit. Medtox's diagnostics arm, based in Burlington, NC, produces on-site drug use screening technology designed for use in corporations, hospitals, prisons, rehabilitation facilities and occupational health clinics, according to its website. Medtox also has its laboratories division, located in St. Paul, MN, according to its website, which is a full-service clinical and drug testing laboratory that contracts out for clinical trials. It also offers direct testing services to physicians' offices, as well as occupational health and pain management clinics.
LabCorp chairman and CEO Dick Braun said in a statement that he sees the Medtox acquisition as "providing a strong foundation for growth" in the toxicology testing side that will also help boost LabCorp's specialty testing division. Meanwhile, Medtox chairman and CEO David King said he sees the deal as accelerating "Medtox's profitable growth."
Medtox generated more than $108 million in revenue in 2011. Burlington, N.C.-based LabCorp, by contrast, booked $5.5 billion in revenue in 2011 and employs more than 31,000 people globally in its various divisions.
- read the deal announcement
- here's Reuters' take
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