Filed by: Quest Diagnostics Incorporated
This communication is filed pursuant to Rules 165 and 425
promulgated under the Securities Act of 1933, as amended.
Subject Company: Unilab Corporation
Commission File No.: 0-22758
FORWARD-LOOKING STATEMENTS:
This communication contains certain forward-looking statements under the Private
Securities Litigation Reform Act of 1995. These forward-looking statements,
which may include, but are not limited to, statements concerning the financial
condition, results of operations and businesses of Quest Diagnostics and Unilab
and the benefits expected to result from the contemplated transaction, are based
on management's current expectations and estimates and involve risks and
uncertainties that could cause actual results or outcomes to differ materially
from those contemplated by the forward-looking statements.
Factors that could cause or contribute to such differences may include, but are
not limited to, the risk that the conditions relating to the required minimum
tender of Unilab shares or regulatory clearance might not be satisfied in a
timely manner or at all, risks relating to the integration of the technologies
and businesses of Quest Diagnostics and Unilab, unanticipated expenditures,
changing relationships with customers, suppliers and strategic partners,
conditions of the economy and other factors described in the most recent reports
on Form 10-Q, most recent reports on Form 10-K and other periodic reports filed
by Quest Diagnostics and Unilab with the Securities and Exchange Commission.
ADDITIONAL INFORMATION:
Quest Diagnostics intends to file a Registration Statement on Form S-4 and a
Schedule TO, and Unilab plans to file a Solicitation/Recommendation Statement on
Schedule 14D-9, with the Securities and Exchange Commission in connection with
the transaction. Quest Diagnostics and Unilab expect to mail a Prospectus, which
is part of the Registration Statement on Form S-4, the
Solicitation/Recommendation Statement on Schedule 14D-9 and related exchange
offer materials, including a letter of election and transmittal, to stockholders
of Unilab upon commencement of the exchange offer.
In addition, Quest Diagnostics intends to file a Statement on Schedule 13D
relating to its agreement with Kelso Investment Associates VI, L.P. and KEP VI,
LLC. Investors and stockholders of Unilab are urged to read all of these
documents carefully when they are available. These documents contain important
information about the transaction and should be read before any decision is made
with respect to the exchange offer. Investors and stockholders will be able to
obtain free copies of these documents through the website maintained by the
Securities and Exchange Commission at www.sec.gov. Free copies of these
documents may also be obtained from Quest Diagnostics, by directing a request to
Quest Diagnostics Incorporated at 1 Malcolm Avenue, Teterboro, NJ 07608, or from
Unilab, by directing a request to Unilab Corporation at 18448 Oxnard Street,
Tarzana, CA 91356.
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In addition to the Registration Statement on Form S-4, Schedule TO, Prospectus,
Solicitation/Recommendation Statement on Schedule 14D-9 and related exchange
offer materials, both Quest Diagnostics and Unilab file annual, quarterly and
special reports, proxy Statements and other information with the Securities and
Exchange Commission. You may read and copy any reports, Statements or other
information filed by Quest Diagnostics or Unilab at the SEC public reference
room at 450 Fifth Street, N.W., Washington, D.C. 20549 or at any of the
Securities and Exchange Commission's other public reference rooms in New York,
New York and Chicago, Illinois. Please call the Securities and Exchange
Commission at 800-SEC-0330 for further information on the public reference
rooms. Quest Diagnostics' and Unilab's filings with the Securities and Exchange
Commission are also available to the public from commercial document-retrieval
services and at the website maintained by the Securities and Exchange Commission
at www.sec.gov.
Contacts:
Quest Diagnostics Incorporated Unilab Corporation
Cathy Doherty (Investors) 201-393-5030 Brian D. Urban: 818-758-6611
Gary Samuels (Media) 201-393-5700
FOR IMMEDIATE RELEASE
---------------------
QUEST DIAGNOSTICS TO ACQUIRE UNILAB CORPORATION
IN TRANSACTION VALUED AT $1.1 BILLION
--Combination to enhance customer service and access
for physicians, hospitals and patients--
TETERBORO, N.J., and TARZANA, Calif., APRIL 2, 2002 - Quest
Diagnostics Incorporated (NYSE: DGX), the nation's leading provider of
diagnostic testing, information and services, and Unilab Corporation (NASD:
ULAB), the leading provider of diagnostic testing services in the California
market, announced today that they have entered into a definitive agreement under
which Quest Diagnostics will acquire all outstanding shares of Unilab common
stock in a transaction valued at $1.1 billion, including approximately $200
million of Unilab debt. In exchange for their Unilab shares, Unilab stockholders
may elect to receive $26.50 in cash, 0.3256 shares of Quest Diagnostics common
stock or a combination of cash and stock.
The aggregate amount of cash payable to Unilab stockholders
will be limited to 30% of the total consideration payable for the Unilab shares.
The stock portion of the consideration was calculated based on the average
closing price of Quest Diagnostics common stock for the five trading days ended
March 28, 2002.
Unilab reported 2001 revenues of $390 million and has about
4,000 employees. Quest Diagnostics will acquire all of Unilab's operations,
including three full-service laboratories, 39 rapid-response laboratories, and
386 patient service centers. The acquisition is expected to be modestly
accretive to Quest Diagnostics' 2002 earnings per share before anticipated
charges related to the transaction. Upon completion of the integration, which is
expected to occur within two years after closing, the transaction is expected to
generate annual synergies of approximately $30 million.
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"This transaction will establish a leading position for Quest
Diagnostics in the largest and one of the fastest growing diagnostic testing
markets in the U.S.," said Kenneth W. Freeman, Chairman and Chief Executive
Officer of Quest Diagnostics. "I am pleased that Bob Whalen, Unilab's Chairman,
President and CEO, will join our team and lead the integration of our California
operations.
"Customers will benefit from improved access to diagnostic
testing services through the largest network of conveniently located patient
service centers in the state," Mr. Freeman continued. "The combination will also
provide customers with innovative technologies and an expanded esoteric testing
menu from Quest Diagnostics' Nichols Institute, based in San Juan Capistrano.
Customers will also have available direct physician-to-physician consultations
with the industry's most extensive network of medical and scientific
specialists. Additionally, physician and hospital customers will benefit from
our state-of-the-art electronic connectivity services."
"We are excited about joining the industry leader, a company
focused on quality with strong vision and values," said Robert E. Whalen,
Chairman, President and Chief Executive Officer of Unilab. "Our customers and
employees will have access to the unparalleled medical and scientific expertise
of the entire Quest Diagnostics laboratory network, including its renowned
Nichols Institute esoteric testing laboratory and research and development
center. In addition, Unilab shareholders will have the opportunity to share in
the value created by combining our two companies."
The transaction will be effected as follows: a cash election
exchange offer in which Unilab stockholders who tender their shares will
receive, at their election, $26.50 in cash or 0.3256 shares of Quest Diagnostics
common stock in exchange for each of their Unilab shares, subject to the 30% cap
on the total amount of cash payable to Unilab stockholders; followed by a
stock-for-stock merger in which each Unilab common share not tendered in the
exchange offer will be converted into 0.3256 shares of Quest Diagnostics common
stock.
Quest Diagnostics expects that the transaction will close late
in the second quarter. Unilab has approximately 37.4 million shares of common
stock outstanding on a fully diluted basis. If stockholders elect to receive 30%
of the consideration in cash and if all options are exercised, Quest Diagnostics
would issue approximately 8.5 million shares and pay approximately $295 million
in cash to stockholders of Unilab.
Under a separate agreement, Kelso & Co., Unilab's largest
stockholder and the holder of approximately 42% of its currently outstanding
common stock, has agreed to tender all of its Unilab shares into the exchange
offer and, under certain circumstances, sell its shares to Quest Diagnostics if
the Merger Agreement is terminated or the exchange offer does not close.
The transaction, which has been approved by the Boards of
Directors of both companies, is subject to the satisfaction of customary
conditions, including the tender of a majority of Unilab's common stock on a
fully diluted basis, and regulatory review.
Quest Diagnostics intends to pay for the cash portion of the
transaction and to refinance Unilab's existing debt with the proceeds of a new
$550 million one-year bridge loan facility. Quest Diagnostics has received a
commitment from Bank of America, N.A. and
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Merrill Lynch Capital Corporation for the bridge facility, which it expects to
refinance shortly after the closing.
Quest Diagnostics will discuss the transaction during a conference call for
investors today at 9:00 a.m. Eastern Time. To hear a simulcast of the call over
the Internet or a replay, registered analysts may access StreetEvents at:
www.streetevents.com; and all others may access the Quest Diagnostics website
at: www.questdiagnostics.com. In addition, a replay of the call will be
available from 11 a.m. today through 5 p.m. on May 18 to investors in the U.S.
by dialing 800-925-2388. Investors outside the U.S. may dial 402-220-4111. No
password is required for either number.
About Unilab
Unilab Corporation is the largest independent provider of
clinical laboratory testing services in California through its primary testing
facilities in Los Angeles, San Jose and Sacramento and over 400 regional service
and testing facilities located throughout the state. Unilab also operates in the
state of Arizona. Additional information is available on the Company's website
at www.Unilab.com.
Quest Diagnostics
Quest Diagnostics Incorporated is the nation's leading
provider of diagnostic testing, information and services, providing insights
that enable physicians, hospitals, managed care organizations and other
healthcare professionals to make decisions to improve health. The company offers
the broadest access to diagnostic laboratory services through its national
network of laboratories and patient service centers. Quest Diagnostics is the
leading provider of esoteric testing, including gene-based medical testing, and
empowers healthcare organizations and clinicians with state-of-the-art
connectivity solutions that improve practice management. Additional company
information can be found on the Internet at: www.questdiagnostics.com.
FORWARD-LOOKING STATEMENTS:
This communication contains certain forward-looking statements under the Private
Securities Litigation Reform Act of 1995. These forward-looking statements,
which may include, but are not limited to, statements concerning the financial
condition, results of operations and businesses of Quest Diagnostics and Unilab
and the benefits expected to result from the contemplated transaction, are based
on management's current expectations and estimates and involve risks and
uncertainties that could cause actual results or outcomes to differ materially
from those contemplated by the forward-looking statements.
Factors that could cause or contribute to such differences may include, but are
not limited to, the risk that the conditions relating to the required minimum
tender of Unilab shares or regulatory clearance might not be satisfied in a
timely manner or at all, risks relating to the integration of the technologies
and businesses of Quest Diagnostics and Unilab, unanticipated expenditures,
changing relationships with customers, suppliers and strategic partners,
conditions of the economy and other factors described in the most recent reports
on Form 10-Q, most recent reports on Form 10-K and other periodic reports filed
by Quest Diagnostics and Unilab with the Securities and Exchange Commission.
ADDITIONAL INFORMATION:
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Quest Diagnostics is filing today a Form 8-K that will include as exhibits the
Agreement and Plan of Merger among Quest Diagnostics, its merger subsidiary and
Unilab Corporation, and the Stockholders' Agreement among Quest Diagnostics, its
merger subsidiary, Kelso LLC and Kelso L.P. Quest Diagnostics intends to file a
Registration Statement on Form S-4 and a Schedule TO, and Unilab plans to file a
Solicitation/Recommendation Statement on Schedule 14D-9, with the Securities and
Exchange Commission in connection with the transaction. Quest Diagnostics and
Unilab expect to mail a Prospectus, which is part of the Registration Statement
on Form S-4, the Solicitation/Recommendation Statement on Schedule 14D-9 and
related exchange offer materials, including a letter of election and
transmittal, to stockholders of Unilab upon commencement of the exchange offer.
In addition, Quest Diagnostics intends to file a Statement on Schedule 13D
relating to its agreement with Kelso Investment Associates VI, L.P. and KEP VI,
LLC. Investors and stockholders of Unilab are urged to read all of these
documents carefully when they are available. These documents contain important
information about the transaction and should be read before any decision is made
with respect to the exchange offer. Investors and stockholders will be able to
obtain free copies of these documents through the website maintained by the
Securities and Exchange Commission at www.sec.gov. Free copies of these
documents may also be obtained from Quest Diagnostics, by directing a request to
Quest Diagnostics Incorporated at 1 Malcolm Avenue, Teterboro, NJ 07608, or from
Unilab, by directing a request to Unilab Corporation at 18448 Oxnard Street,
Tarzana, CA 91356.
In addition to the Registration Statement on Form S-4, Schedule TO, Prospectus,
Solicitation/Recommendation Statement on Schedule 14D-9 and related exchange
offer materials, both Quest Diagnostics and Unilab file annual, quarterly and
special reports, proxy Statements and other information with the Securities and
Exchange Commission. You may read and copy any reports, Statements or other
information filed by Quest Diagnostics or Unilab at the SEC public reference
room at 450 Fifth Street, N.W., Washington, D.C. 20549 or at any of the
Securities and Exchange Commission's other public reference rooms in New York,
New York and Chicago, Illinois. Please call the Securities and Exchange
Commission at 800-SEC-0330 for further information on the public reference
rooms. Quest Diagnostics' and Unilab's filings with the Securities and Exchange
Commission are also available to the public from commercial document-retrieval
services and at the website maintained by the Securities and Exchange Commission
at www.sec.gov.
# # #
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