BY MIKE BOYER
The Cincinnati Enquirer
In one of its largest acquisitions, Kroll-O'Gara Co. said Thursday it agreed to buy a fast-growing provider of pre-employment drug testing for $29 million in stock.
Fairfield-based Kroll-O'Gara would acquire all the shares of Laboratory Specialists of America Inc., for $5 a share, payable in Kroll-O'Gara stock.
The agreement, which still must be approved by shareholders of Laboratory Specialists, is expected to be completed by year-end. News of the agreement pushed Kroll's shares up $1.50 to $24.25 and Laboratory Specialists' rose 50 cents to $4.25.
Laboratory Specialists operates a laboratory in New Orleans certified by the federal Substance Abuse and Mental Health Services Administration.
The company provides employee drug screenings to corporations and institutional clients with a 24-hour turnaround time, said Bill O'Gara, Kroll-O'Gara's president.
The acquisition will expand the capabilities of Kroll-O'Gara's employment screening services.
"Laboratory Specialists gives our investigative and intelligence group the opportunity to continue to expand its presence in the broad-based pre-employment screening business by bundling routine drug testing with background checks," he said.
"Our customers have repeatedly asked for this kind of service," he said.
Laboratory Specialists, based in Oklahoma City, has completed six acquisitions of its own since making its initial public stock offering in 1994. The latest was Toxworx Laboratories in Woodland Hills, Calif., in June.
Mr. O'Gara said Kroll-O'Gara will continue to seek acquisitions to expand the drug-screening business.
Laboratory Specialists is expected to generate revenues of $16 million this year and nearly $30 million in 1999, Mr. O'Gara said.
Last year the company had earnings of $1.3 million on revenues of $12.8 million.
He said the acquisition should add to Kroll-O'Gara's earnings this year and in 1999. He declined to say how much.
