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Welsh Carson in $1.7B Cancer Services Privatization
March 22, 2004

New York-based private equity firm Welsh, Carson, Anderson & Stowe announced it acquired cancer-care services company US Oncology in a privatization valued at $1.7 billion.

The deal, which still must meet shareholder approval, calls for Welsh Carson to pay $15.05 per share in cash for the shares. The deal is valued at $1.7 billion, which includes consideration for outstanding stock options and the assumption of debt obligations after the privatization. The price-per-share Welsh Carson is paying reflects an 18.5% premium above the March 19 closing price of $12.70.

Welsh Carson already owned approximately 14.5% of the company’s shares and is attempting to acquire the rest. Welsh Carson was a founding investor of US Oncology in 1992. The firm also invested in the company in October 2001 and has steadily increased its holding in the company since that time.

US Oncology provides cancer-car services to affiliated practices and more than 875 doctors. The company also operates 78 cancer centers and cares for approximately 15% of the country’s new cancer cases each year. The company had revenues of $1.97 billion in 2003– up 19% from 2002.

“Welsh Carson has a long and successful track record investing in health care companies and we believe their experience and resources will be valuable as US Oncology continues to pursue its strategic objectives in enhancing access to high-quality cancer care,” R. Dale Ross, chairman and chief executive officer of US Oncology, said in the statement.

Welsh Carson declined to comment on the investment.

Welsh Carson used capital from its Welsh, Carson, Anderson & Stowe IX fund, which closed on $3.8 billion in 2001. The firm has done privatizations of healthcare companies in the past. In December 2002, the firm acquired AmeriPath, a provider of cancer diagnostics, genomic, and related information services, in a public-to-private buyout that values the company at $839.4 million.

Welsh, Carson, Anderson & Stowe was founded in 1979 and has raised more than $11 billion in 12 private investment partnerships. The firm has completed more than 200 investments.