Quest Diagnostics, provider of diagnostic testing, information and services, has signed an agreement to acquire AmeriPath in an all cash transaction valued at approximately $2bn. Quest Diagnostics Incorporated, provider of diagnostic testing, information and services, and AmeriPath, Inc., a national diagnostic testing company, announced that Quest Diagnostics has signed a definitive agreement to acquire AmeriPath in an all cash transaction valued at approximately $2bn, including approximately $770m in debt at closing. AmeriPath, a company controlled by Welsh, Carson, Anderson and Stowe IX, L.P., is a leading provider of dermatopathology, anatomic pathology and esoteric testing with annualized revenues in excess of $800m.

"This acquisition will establish our leading position in cancer diagnostics with a focus on dermatopathology, anatomic pathology and molecular diagnostics," said Surya N. Mohapatra, Ph.D., Chairman and Chief Executive Officer, Quest Diagnostics. "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."

AmeriPath, Inc. operates three divisions. Dermpath Diagnostics has an industry-leading team of over 80 board-certified dermatopathologists who interpret 2.4 million biopsies annually. Its anatomic pathology division, which operates under the AmeriPath brand, has expertise in gastroenterology, urology, oncology and women's health. Specialty Laboratories, its esoteric testing business, is a leading full-service clinical laboratory serving hospitals, reference laboratories and physicians nationwide. AmeriPath has approximately 400 pathologists and clinical scientists and has nearly 4,000 employees.

"AmeriPath and Quest Diagnostics share a deep commitment to providing the highest quality diagnostic services to physicians and their patients," said Donald E. Steen, Chairman and Chief Executive Officer, AmeriPath. "The joining together of our companies will facilitate and accelerate our mission of becoming the leader in the innovative delivery of quality pathology disease management services."

The transaction is expected to be completed during the second quarter of 2007 and is subject to the satisfaction of customary conditions, including regulatory clearance. The acquisition is expected to have minimal impact to Quest Diagnostics' 2007 earnings per share and be modestly accretive to 2008 earnings per share, before anticipated charges related to the transaction.

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