BURLINGTON, N.C. and DALLAS, May 9, 2002 /PRNewswire-FirstCall via COMTEX/ --Laboratory Corporation of America(R) Holdings (LabCorp(R)) (NYSE: LH), anational clinical laboratory with 2001 revenues of $2.2 billion, and DynacareInc. (Nasdaq: DNCR; Toronto: DNA), a leading independent provider of laboratorytesting in North America, today announced that they have entered into adefinitive agreement under which LabCorp will acquire all of the outstandingshares of Dynacare for approximately $480 million in cash and stock. Inaddition, LabCorp will assume approximately $205 million in Dynacare debt inconjunction with the closing of the transaction.
The acquisition is anticipated to be immediately accretive to LabCorp's EPS in2002, and to adjusted earnings before interest, taxes, depreciation andamortization (EBITDA) in the first full year. LabCorp expects to realize anestimated $45 million in annual cost savings synergies by year-end 2004.
Under the terms of the agreement, which was unanimously approved by the boardsof both companies, LabCorp will acquire 100 percent of the outstanding shares ofDynacare common stock for $23.00 per share pursuant to a Plan of Arrangementunder Canadian Law. Under the Plan of Arrangement, each outstanding share ofDynacare common stock will be exchanged for $11.50 in cash and 0.1164 shares ofLabCorp common stock. LabCorp will issue approximately 2.4 million new commonshares in connection with the transaction, based on Dynacare's approximately20.9 million diluted shares outstanding. The cash component of the transactionwill be funded by a combination of cash on hand, borrowings under LabCorp'sexisting credit facility and a new bridge loan facility.
Under separate agreements, Dynacare's two largest shareholders and certainofficers and directors, who hold in the aggregate 48.2 percent of Dynacare'soutstanding common stock, will irrevocably undertake to vote their shares infavor of the Plan of Arrangement and, under certain circ*mstances, sell theirshares to LabCorp if the Agreement is terminated or the Arrangement does notclose. The offer and the merger are conditioned on, among other things, afavorable vote by the holders of two-thirds of Dynacare's outstanding commonshares and regulatory approvals in the U.S. and Canada.
Dynacare, with 24 central laboratories, two esoteric laboratories, 115 rapidresponse labs and 302 patient service centers, provides clinical laboratorytesting services in 21 states and two Canadian provinces. Dynacare, a portfoliocompany of private equity firm GTCR Golder Rauner, L.L.C., had 2001 revenues ofapproximately $238 million (based on U.S. GAAP) and has approximately 6,300employees.
"We are excited to have reached an agreement with Dynacare," said Thomas P. MacMahon, LabCorp chairman and chief executive officer. "This transaction willenable LabCorp to provide more physicians and their patients with improvedaccess to an expanded menu of leading-edge testing technologies. The merger willalso expand our ability to service managed care and hospital customers and toachieve greater operating efficiencies. Clearly, the combination with Dynacarewill help us achieve these objectives."
Mr. Mac Mahon also said, "We are pleased that Harvey A. Shapiro, chairman andchief executive officer of Dynacare, has agreed to remain with the Company andbecome president of the Canadian operations, in addition to participating in theintegration of the two companies."
Mr. Shapiro said, "We are very excited about the opportunities this combinationpresents and believe this transaction offers our shareholders fair value fortheir Dynacare investment. Further, joining the strengths of Dynacare andLabCorp will create a more dynamic company in a swiftly changing and ever moredemanding health care marketplace."
Dynacare has also announced the termination of its joint ventures in Pittsburgh,PA and Schenectady, NY. These terminations are expected to result in an aftertax charge of approximately $4.7 million in Dynacare's second quarter.
LabCorp will host a conference call with investors to discuss the transaction onMay 9, 2002 at 9:00 a.m. ET. A live webcast of the call will be available onlineat www.labcorp.com or at www.streetevents.com beginning at 9:00 a.m. ET, with anonline rebroadcast continuing through May 24, 2002. The live call at 9:00 a.m.is also available in a listen-only mode by dialing 212-346-6440. A telephonereplay of the call will be available through May 16, 2002, and can be heard bydialing 800-633-8284 (858-812-6440 for international callers). The access codefor the replay is 205-91-655.
About Dynacare
Through its integrated network of regional laboratory operations, Dynacareprovides innovative and trusted clinical laboratory services to its clients,their patients and professional partners. Dynacare provides laboratory servicesin 21 U.S. states and is a leading provider of laboratory services in Canada.Further information about Dynacare can be obtained from the Company's web siteat www.dynacare.com.
About LabCorp
The first national clinical laboratory to fully embrace genomic testing,Laboratory Corporation of America(R) Holdings (LabCorp(R)) has been a pioneer incommercializing new diagnostic technologies. As a national laboratory withannual revenues of $2.2 billion in 2001 and over 19,000 employees, the Companyoffers more than 4,000 clinical tests ranging from routine analyses tosophisticated molecular diagnostics. Serving over 200,000 clients nationwide,LabCorp combines its expertise in innovative clinical testing technology withits Centers of Excellence. The Center for Molecular Biology and Pathology, inResearch Triangle Park, North Carolina, offers state-of-the-art moleculargene-based testing in infectious disease, oncology and genetics. Its NationalGenetics Institute in Los Angeles is an industry leader in developing novel,highly sensitive polymerase chain reaction (PCR) methods for testing hepatitis Cand other blood borne infectious agents. LabCorp's Minneapolis-based ViroMedoffers molecular microbial testing using real time PCR platforms, while itsCenter for Esoteric Testing in Burlington, North Carolina, performs the largestvolume of specialty testing in the network. LabCorp's clients includephysicians, state and federal government, managed care organizations, hospitals,clinics, pharmaceutical and Fortune 1000 companies, and other clinicallaboratories.
For LabCorp Investors
Each of the above forward-looking statements is subject to change based onvarious important factors, including without limitation, competitive actions inthe marketplace and adverse actions of governmental and other third-partypayors. Further information on potential factors that could affect LabCorp'sfinancial results is included in the Company's Form 10-K for the year endedDecember 31, 2001 and subsequent SEC filings.
For Dynacare Investors
This press release may contain "forward-looking statements" within the meaningof Section 21E of the Securities Exchange Act of 1934. When used in this pressrelease, the words "may," "could," "should," "would," "believe," "anticipate,""estimate," "expect," "intend," "plan" and similar expressions or statementsregarding future periods are intended to identify forward-looking statements.All forward-looking statements are inherently uncertain as they are based onvarious expectations and assumptions concerning future events, which by theirnature involve substantial risks and uncertainties beyond Dynacare Inc.'scontrol. Dynacare Inc. undertakes no obligation to update or revise anyforward-looking statement for events or circ*mstances after the date on whichsuch statement is made. Dynacare Inc. cannot assess the impact of or the extentto which any single factor or risk, or combination of them, may cause actualresults to differ materially from those contained in any forward-lookingstatements. For a more complete discussion of risk factors, please see DynacareInc.'s filings with the Securities and Exchange Commission, including its AnnualReport on Form 10K for the year ended December 31, 2001.
Security holders of Dynacare Inc. are urged to read the proxy statementregarding the proposed Plan of Arrangement when it is finalized and distributedto security holders because it will contain important information for making aninformed decision. The definitive proxy statement will be filed with the U.S.Securities and Exchange Commission (the"SEC") by Dynacare, and security holdersmay obtain a free copy of such proxy statement when it becomes available, andother documents filed with the SEC by Dynacare, at the SEC's website atwww.sec.gov. The definitive proxy statement, when it becomes available, andother documents filed by Dynacare, may also be obtained free of charge bydirecting a request to Dynacare Inc., 14900 Landmark Boulevard, Suite 200,Dallas, Texas 75254, attention: Zbig S. Biskup, Executive Vice President andChief Financial Officer and Secretary.
Dynacare and it directors and executive officers may be deemed to beparticipants in the solicitation of proxies from the security holders ofDynacare in favor of the transaction. The directors and executive officers ofDynacare and their beneficial ownership of Dynacare common stock as of April 15,2002 are set forth in the proxy statement for the 2002 annual meeting filed byDynacare on April 30, 2002. Security holders of Dynacare may obtain additionalinformation regarding the interests of such participants by reading thedefinitive proxy statement when it becomes available.
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SOURCE Laboratory Corporation of America Holdings
CONTACT: Pamela Sherry of Laboratory Corporation of America Holdings, +1-336-436-4855, or [emailprotected], or Shareholder Direct, 1-800-LAB-0401; or Zbig Biskup of Dynacare Inc., +1-972-387-3200, or [emailprotected]URL: http://www.dynacare.com http://www.labcorp.comhttp://www.prnewswire.com
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