Health Care Deal News: Spotlight on Hospitals- September 2012

Most of the activity in the hospital market has been in the not-for-profit sector, with a few large “mergers” announced.  Colorado-based Catholic Health Initiatives has agreed to merge its seven hospitals in Washington and Oregon with Washington-based PeaceHealth’s nine hospitals in Washington (4), Oregon (4) and Alaska (1).  The deal will create an integrated regional health system with nearly 26,000 employees and 950 employed physicians with almost $4.0 billion in annual revenue. The transaction is not expected to be finalized until June 30, 2013. 

In Minnesota, managed care company HealthPartners, which serves more than 1.4 million medical and dental plan members and which also owns four hospitals, is merging with Park Nicollet Health System, which is based outside of the Twin Cities.  Park Nicollet owns a 426-bed hospital, a clinic and a few other assets, including Park Nicollet Foundation and Park Nicollet Institute.  HealthPartners’s CEO will become CEO of the combined organization, which will be named HealthPartners.

The big news in the hospital market actually came from across the pond in Germany.   Last April, Fresenius SE (NYSE: FMS) announced an agreement to purchase Rhoen-Klinikum AG, another German company with 53 hospitals, 39 health centers and revenues of $3.3 billion.  The price was about $3.9 billion, and Fresenius needed the approval of 90% of the shareholders. Major investors had indicated they would tender their shares, but what Fresenius did not count on was two “rivals” purchasing just over 5% of the shares each, thus effectively being able to block the purchase. One of the foils was the third largest hospital operator in Germany, Asklepios, while the other was B. Braun, which competes with Fresenius in supplying medical equipment.  As a result, Fresenius decided to terminate its takeover attempt, but may up its ownership interest anyway.  This story may not be over yet...........Want to read more? Click here for a free trial to The Health Care M&A Information Source and download the current issue today