By Kirell Lakhman

Quest Diagnostics is offering to sell $750 million in new debt, part of which it will use to make a “potential cash acquisition of a diagnostics testing business,” the company said in an SEC filing today.

“[W]e are currently considering the potential cash acquisition of a diagnostics testing business,” the lab said in the filing. “If we enter into a definitive agreement with respect to this acquisition, we would expect to use a portion of the … net proceeds from this offering to fund the purchase price of the acquisition in its entirety.”

Quest said it will use the majority of the offering to repurchase $475 million in existing debt that is due over the next two years. “To the extent that any net proceeds from this offering remain after we repay indebtedness … and fund the potential acquisition, if consummated, we intend to use those net proceeds for general corporate purposes, including other acquisitions, capital expenditures, share repurchases and repayment of other indebtedness.”

As I reported in September, Ralph Giacobe, an investment bank analyst at Credit Suisse, said slowing profit growth at Quest and chief rival LabCorp could push the labs to make a “large international acquisition in the next year or 18 months.”

The previous month, Quest had acquired Caritas Medical Laboratories, the physician office lab business of Caritas Christi Health Care, the largest community based health care system in New England.

LabCorp could already be priming itself for an acquisition. Last month, during the firm’s third-quarter conference call, a company official dropped a strong hint that it is considering making acquisitions in the esoteric-testing space, while another official suggested a buy would come from overseas.

Stephen Anderson, director of investor relations, said "[t]he acquisition market remains attractive with a number of opportunities to strengthen our scientific capabilities, grow our esoteric testing franchise, and increase our presence in key geographic areas."

Meantime, in the lab’s earning statement, CEO David King said “continued growth” in the firm's esoteric-testing play helped drive a 4.2-percent increase in third-quarter revenue,” while during the conference call he said "we are going to continue to focus on growing the esoteric volumes and fully integrating the esoteric businesses into the test menu.”

LabCorp "would like to be able to compete for large international trials in addition to being an esoteric niche lab, and to do that we need more international reach in the clinical trials business," King added.

Their comments add fuel to growing speculation that LabCorp is actively considering making an acquisition.