The Health Care M&A Monthly: Tenet Acquires Vanguard -
Consolidation Pressure Mounts for Other Systems
The for-profit hospital space became a little less crowded last month, when Tenet Healthcare Corp. (NYSE: THC) surprised many industry analysts with its acquisition of Vanguard Health Systems (NYSE: VHS) for a total of $4.3 billion. On the analysts’ call that followed the announcement, several praised the deal, which brings together two health systems with little market overlap and the promise of more acquisitions to come.
The terms of the deal call for Tenet to pay $21 per share in cash and to assume $2.5 billion of Vanguard’s debt. Tenet expects the transaction to be accretive to earnings in the first year, and hopes to realize “annual synergies” of $100 million to $200 million. The price represents about a 70% premium over Vanguard’s closing price on June 24. Private equity firm Blackstone Group LP is Vanguard’s largest shareholder, with a 38% stake. The transaction is expected to close by the end of the year.
The announcement comes at critical time for hospital systems, as they move from volume-based pricing to value-based care. At the same time, weakening patient volume is looking like a permanent state rather than a ......Want to read more? Click here for a free trial to The Health Care M&A Information Source and download the current issue today