Medical testing firm LabCorp plans to pay roughly $6.1 billion in cash and stock to buy medical research firm Covance in a transaction aimed at creating a healthcare diagnostics giant, the companies said Monday.
The deal marks the latest in a series of healthcare industry transactions designed to help companies capture increased market share in the services they offer. Covance shares soared nearly 25.9%, closing at $100.57 in Monday afternoon trading. LabCorp shares, meanwhile, closed down nearly 7.4% at $101.23.
Burlington, N.C.-based LabCorp said it would pay $105.12 for each share of Princeton, N.J.-headquartered Covance. That represents a 32% premium to Covance’s closing price on Friday. Approved by the boards of both companies, the deal would pay Covance shareholders $75.76 in cash and 0.2686 LabCorp shares for each Covance share they currently own. That would give Covance investors roughly 15.5% ownership of the new firm.
LabCorp, officially known as Laboratory Corporation of America Holdings, said the new company that emerges from the transaction would improve patient recruitment for trials, make research more efficient and deliver drug data faster. LabCorp provides medical testing services through a network of laboratories. Covance provides drug development services with a focus on nutritional analysis.