US Oncology, Houston, said today that the cancer-care services company has signed an agreement to merge with Oiler Acquisition Corp., an affiliate of Welsh, Carson, Anderson & Stowe., one of the largest private equity firms in the U.S., which owns approximately 14.5% of US Oncology's common stock.
Upon completion of the transaction, valued at approximately $1.7 billion including consideration for outstanding stock options and the assumption of certain debt obligations, US Oncology will become a privately held company.
Under the terms of the merger, the holders of US Oncology common stock, other than Welsh Carson, will receive $15.05 per share in cash for their shares, which represents an 18.5% premium above the March 19 closing price of $12.70 on the NASDAQ.
US Oncology said its chairman and CEO, R. Dale Ross and other senior managers would continue as employees after the takeover, which was approved in a unanimous vote by US Oncology's board of directors. The terms of the takeover permit the company to solicit other possible bidders until April 6, but US Oncology would face a $12 million breakup fee if it accepts a superior bid.
The company last month reported a quarterly profit of $18.9 million but warned that earnings in 2005 would fall because of recent changes in Medicare rates that will reduce reimbursement for cancer care.