The Health Care M&A Monthly: The Big Spenders Of 2011--

37 Billion-Dollar Buyers Spend $168.0 Billion

 
Against the constant din of doom and gloom headlines emanating from the general media this year, the 2011 health care merger and acquisition market illustrated the proverb, “When the going gets tough, the tough get going,” by posting the second highest level of activity for the past decade. Based on preliminary figures (and omitting all December deals), 2011 recorded approximately 900 deals worth a combined total of $236.7 billion. This tops 2010’s full-year dollar volume of $207.9 billion by 14% and comes in second only to the $268.4 billion for 2006. Clearly, the buyers and their financial backers have seen worthwhile opportunities in this market to grow their business through M&A, and have not been shy in pursuing them.

Of the 900 deals announced so far in 2011, 500 were one-off transactions made by a single buyer; the remaining 400, worth about $124.0 billion, involved 143 buyers who made two or more deals. Multiple buyers thus captured 44% of the 2011 market, in line with the multiple buyers in 2010 and 2009 who captured 46% and 42% of their respective markets. The most prolific buyer in terms of deal volume was IPC The Hospitalist (NASDAQ: IPCM) with 11 deals. It was followed by RadNet (NASDAQ: RDNT) and Valeant Pharmaceuticals (NYSE: VRX) with eight deals each. AdCare Health Systems (AMEX: ADK), Health Care REIT (NYSE: HCN) and Mednax (NYSE: MD) each announced seven deals. The buyers who produced six deals include The Ensign Group (NASDAQ: ENSG), PerkinElmer (NYSE: PKI), Pfizer (NYSE: PFE) and Roche Holdings (VX: ROG). Those organizations posting five deals include Bon Secours Charity Health System, Community Health Systems (NYSE: CYH), Johnson & Johnson (NYSE: JNJ), Meda AB (STO: MEDAA), Sabra Health Care REIT (NASDAQ: SBRA) and U.S. Healthworks. Note that with two exceptions, all the companies in this cohort are publicly traded; their access to the public equity markets, not to mention their often generous cash flow, equip them with the capital to undertake multiple deals. The two outliers here, Bon Secours Charity Health System and U.S. Healthworks, a not-for-profit and a private firm, respectively, announced several deals to enlarge their provider networks.

 What They Paid

During 2011, 37 buyers committed $1.0 billion or more to the health care M&A market; 21 companies made multiple deals while the remaining 16 made one apiece. They are identified in the table opposite, along with the number of deals they made and the dollars they spent. Together they spent a combined total of $167.8 billion to finance 90 deals. So just 12% of the buyers accounted for 71% of all the health care M&A dollars for the year. Within this group, only eight deals were announced by financial buyers, such as REITs or private equity shops, worth a total of $30.7 billion. Strategic buyers continue to dominate the market.

Since our figures are derived from announced deals, rather than closed ones, future events—or nonevents—could alter these results...Want to read more? Click here for a free trial to The Health Care M&A Monthly and download the current issue today