Investment Firm to Buy Tarzana’s Unilab Corp.

Unilab Corp., Tarzana, the biggest clinical laboratory-testing company in California, agreed to be acquired by Kelso & Co. for about $420 million in cash and debt.

Kelso, an investment company, will own about 93% of Unilab shares, buying them for $5.85 each in cash.

Fierce competition in the California clinical-testing industry during the 1990s forced some companies into bankruptcy. Now, with fewer rivals, Unilab is able to charge higher prices, helping boost the company’s earnings and share price. The purchase will give shareholders a better return than Unilab has provided, analysts said.

“This is a company that’s kind of back from the dead in an industry that’s kind of back from the dead,” said Nancy Weaver, a Stephens Inc. analyst with a “buy” rating on Unilab. “It’s a lower-risk strategy for management.”

Unilab provides clinical testing services to doctors, hospitals and other health care providers.