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Doubting the LabCorp ‘buyout’

By
Dan Primack
Dan Primack
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By
Dan Primack
Dan Primack
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August 2, 2012, 7:06 PM ET
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FORTUNE — If private equity firms are considering a mega-buyout of Laboratory Corp. of America (LH), someone might want to tell the private equity firms.

The medical testing company saw its stock rise by nearly 5% at one point yesterday, after Mergermarket reported that several large buyout firms were preparing an acquisition offer. And that’s no small bump, since we’re talking about a company with a market cap in excess of $8 billion.

Only problem is that I can’t find anyone who thinks the company is actually in play. And that includes folks at some of the big private equity firms named in the story as likely suitors.

“If this was really happening and the consortium isn’t filled out, it seems pretty unlikely that we wouldn’t have gotten a call,” said one healthcare-focused private equity executive. Another said that he was “laughing” at the rumors.

Then there is LabCorp itself, which yesterday said in a press release that it “has no knowledge of any such plans and is not in current discussions with any firms to effect such a transaction.” Pretty unambiguous, particularly the part about no knowledge. No wonder short volume spiked later in the day and the stock ultimately closed up just 3.37%.

To be sure, it is possible that two private equity firms are quietly working on this deal in concert with BoA Merrill Lynch, as Mergermarket reported. But the universe for this sort of transaction is pretty small, rarely are such deals proprietary and the larger the consortium the smaller the chance for a superior bid (not to mention that few firms these days have the fund sizes to cut $1 billion equity checks).

But a more likely scenario is that some bankers floated the idea to drum up interest for a possible bid, or perhaps some hedge fund managers were looking for a bump.

The private equity market has been waiting all year for a $10 billion+ buyout. Don’t expect LabCorp to be that deal.

Sign up for Dan’s daily email newsletter on deals and deal-makers: GetTermSheet.com

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By Dan Primack
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