LabCorp Buyout Needs Pre-Bust M&A Market (Update 1)
Updated to include LabCorp statement
NEW YORK (TheStreet) -- Clinical laboratory giant LabCorp's (LH) shares are up after a Mergermarket report that it may become the target of a private equity buyout, in a consortium deal that would mirror the size and style of pre-bust leveraged takeovers.
Bank of America (BAC) is reportedly working to arrange debt financing to fund the group buyout, which could involve private equity giants TPG Capital and Bain Capital, in addition to KKR (KKR) and The Blackstone Group (BX) . Potential buyout participants could put in $3 billion to $4 billion apiece, Mergermarket reports, citing unnamed sources.
LabCorp rebutted the notion that it is in talks about a buyout. "The company has no knowledge of any such plans and is not in current discussions with any firms to effect such a transaction," said LabCorp, in a statement. "Beyond that the company intends to maintain its policy of not commenting on market rumors or speculation," it added.
Although a horde of unused private equity cash augurs well for large buyouts, only a few recent deals have been transacted. Apollo Group(APO) and KKR have recently used recovering debt markets to raise billions in leveraged buyout debt for energy sector takeovers of El Paso's oil exploration unit and privately held exploration and production company Samson, but debt-fueled consortium bids have been rare since the financial crisis.
A dearth of consortium buyouts makes the report of interest in a LabCorp notable because of the size of a potential deal and the established appetite of PE firms for deals across the health care sector: clinical research labs, medical devices and hospitals. A consortium bid funded by billions in new debt would mirror some of the larger pre-bust healthcare buyouts, like KKR's takeover of HCA Holdings (HCA) .