The second- and third-largest ambulance chains have agreed to merge in a deal valued at $355 million.
MedTrans Healthcare Transportation, a division of Laidlaw, agreed to buy CareLine, forming what officials say will be the nation's largest ambulance company with $500 million in annual revenues.
Currently, that distinction is claimed by American Medical Response, a Boston-based firm with about $450 million in annual revenues.
Burlington, Ontario-based Laidlaw has agreed to exchange 1.1 Laidlaw Class B non-voting shares for each CareLine share. Santa Ana, Calif.-based CareLine is traded on the over-the-counter market; Laidlaw is traded on the Montreal, New York and Toronto exchanges. Laidlaw will assume $175 million in CareLine debt.
The deal is evidence of further consolidation in a fragmented industry that has been undergoing extensive acquisition activity (May 23, 1994, p. 93).
"CareLine was fairly heavily leveraged and needed a stronger balance sheet to further its acquisitions," said Randy Huyser, health services analyst in the San Francisco office of Furman Selz, an investment banking firm. Combining the companies will allow Laidlaw to achieve further market economies, he said. Both companies operate ambulance services in Southern California, Washington state and the northeastern United States.
The merged company will employ more than 10,000 workers and provide services to more than 2.2 million patients annually, officials said.
In a related announcement, CareLine said it expects to report a loss of $2.2 million for the second quarter ended June 30, compared with net income of $962,000 in the year-ago quarter. The company said the loss stems from $4 million in doubtful accounts and other nonrecurring costs. A complete financial report is expected to be released next week.