Tenet Healthcare said on Monday that it had agreed to acquire Vanguard Health Systems for roughly $1.8 billion in a deal that will put Tenet into new markets.
The offer of $21 in cash for every Vanguard represents a premium of 70 percent over Vanguard’s closing stock price on Friday. Tenet will also assume $2.5 billion in Vanguard debt.
Based in Nashville, Vanguard owns and operates 28 acute care hospitals with 7,081 licensed beds in San Antonio, Harlingen and Brownsville in Texas, metropolitan Detroit, metropolitan Phoenix, metropolitan Chicago and in Massachusetts. The company also owns managed health plans in Chicago, Detroit, Harlingen, Tex. and Phoenix, and it has two surgery centers in Orange County in California.
Tenet, based in Dallas, has 49 hospitals with a total of 13,180 licensed beds and 122 outpatient enters. It also owns Conifer Health Solutions.
“This unique strategic transaction will bring together organizations that share a common commitment to providing high quality care and create significant new growth prospects for Tenet,†Trevor Fetter, Tenet’s chief executive said in a statement. “This acquisition will take Tenet into new geographic markets, expand the breadth of our service offerings, diversify our earnings sources and increase the benefits we expect to realize under healthcare reform. This acquisition will also include a substantial contribution from the application of Conifer’s capabilities to Vanguard’s operations. We expect additional financial contributions to come from supply costs savings and labor management efficiencies.â€
Tenet has secured financing for the deal from Bank of America Merrill Lynch.
Lazard was lead financial and strategic adviser to Tenet. Gibson Dunn & Crutcher served as Tenet’s legal counsel. Bank of America Merrill Lynch, Barclays and Teneo Capital also served as advisers for Tenet.
JPMorgan Chase and the law firm Skadden, Arps, Slate, Meagher & Flom advised Vanguard.
