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July 1, 2013 Issue:
Recent Health Care M&A Deals
Hospitals
Acquirer
Target
Price
Tenet Healthcare Corporation
Vanguard Health Systems, Inc.
$4.3 billion
Robert Wood Johnson University Hospital
Somerset Medical Center
Merger
Laboratories, MRI and Dialysis
Acquirer
Target
Price
LifeLabs Medical Laboratory Services
CML HealthCare Inc.
$1.16 billion
Physician Medical Groups
Acquirer
Target
Price
MEDNAX, Inc.
Neonatology Practice in TX
N/A
Radiation Therapy Services, Inc.
OnCure Holdings, Inc.
$125 million
Services Deal of the Week
For deal junkies, there’s nothing better than starting off a week with a multi-billion-dollar deal. That’s just what happened on Monday, June 24, when Tenet Healthcare Corporation (NYSE: THC) announced it would acquire Vanguard Health Systems (NYSE: VHS) for $4.3 billion, including the assumption of $2.54 billion of Vanguard’s debt. Tenet estimates it will see $100 million to $200 million in annual savings, making investors very happy and sending both stocks soaring. The combined company will have 79 hospitals and 157 outpatient centers, with little to no overlap in each company’s existing markets. Tenet fended off a hostile takeover by Community Health Systems (NYSE: CYH) in 2011. Now investors’ eyes are turned to Community, waiting to see if it will make a bid for Health Management Associates (NYSE: HMA), which is having trouble with its largest shareholder, Glenview Capital Management. With just six months until the Affordable Care Act takes effect, there isn’t much time to wait. Gibson Dunn & Crutcher was Tenet’s legal counsel and Lazard, Bank of America Merrill Lynch, Barclays and Teneo Capital were financial and strategic advisors. Vanguard was advised by J.P. Morgan. Skadden, Arps, Slate, Meagher and Flom was Vanguard’s legal counsel…….Want to read more news? Click here for a free trial to The Health Care M&A Information Source and download the current issue today.
Charted Territory
What are private equity firms buying in the health care market in 2013? Long-term care properties (10 so far) top the list, with the largest PE deal being made by TPG, which bought Assisted Living Concepts, Inc. (NYSE: ALC) for $458.5 million back in February. Leaving the LTC sector aside for another week, we charted the 12 remaining deals involving PE firms that have been made public in 2013, through June 6th. None came with disclosed prices, although three targets included a publicly traded company or some assets of a public company. A few acquisitions were foreign-based, such as Techno Group’s purchase of the Turkish diagnostic imaging company, Dogu Tip, and Progress Medical’s acquisition of OB Klinika in Prague, which specializes in the treatment of obesity and metabolic diseases. Ares Life Sciences, a Swiss investment group backed by the Bertarelli family, made two purchases in the U.S. this year involving a Pharma and a Biotech company. Two major PE players made big buys in eHealth, while others did deals in Labs/MRI/Dialysis, Medical Devices and Home Health & Hospice. With the Biotech IPO market heating up like an egg on a sidewalk in the summertime, we could see a lot more PE action before the year is out.
Health Care Acquisitions* by Private Equity Firms, through June 6, 2013
Acquirer
Target
Target’s sector
The Gores Group
GE Healthcare Strategic Sourcing
eHealth
Welsh, Carson, Anderson & Stowe
GetWellNetwork, Inc.
eHealth
JLL Partners and Ampersand Partners
BioClinica, Inc.
Labs, MRI & Dialysis
Techno Group Investment Holdings
Dogu Tip
Labs, MRI & Dialysis
ICV Partners
Atlantis Healthcare Group Puerto Rico
Labs, MRI & Dialysis
Arlington Capital Partners
Micron Technologies, Inc.
Other
Ares Life Sciences
GREER Laboratories, Inc.
Pharmaceuticals
Ares Life Sciences
Antigen Laboratories, Inc.
Biotechnology
Progress Medical
OB Klinika
Physician Medical Group
Harvest Partners, LP
AxelaCare Holdings, Inc.
Home Health & Hospice
Blackford Capital
Mopec, Inc.
Medical Devices
Frazier Healthcare Ventures
Orthotic Holdings, Inc.
Medical Devices
* excluding Long-Term Care properties. Source: Irving Levin Associates, Inc., June 2013
Want to read more news? Click here for a free trial to The Health Care M&A Information Source and download the current issue today
Technology Deal of the Week
Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) boosted its respiratory drug pipeline with the acquisition of MicroDose Therapeutx, a privately held company focused on inhalation technologies and products for lung diseases and infections, with the goal of improving efficacy and patient compliance. Teva will acquire all of MicroDose’s outstanding shares for $40 million, and additional payments of up to $125 million to meet regulatory and development milestones. Stifel acted as exclusive financial advisor to MicroDose Therapeutx…..Want to read more news? Click here for a free trial to The Health Care M&A Information Source and download the current issue today.
In the Pipeline
PTC Therapeutics, Inc. (NASDAQ: PTCT), a biopharmaceutical company, launched itself into the public equity market on June 20th with an IPO of 8,372,000 shares of common stock priced at $15.00 per share, before underwriting discounts. PTC focuses on discovering orally administered small-molecule drugs that target post-transcriptional control processes (hence the PTC). Post-transcriptional control processes are important because they regulate the rate and timing of protein production and are critical to proper cellular function. PTC’s pipeline addresses multiple therapeutic areas, including rare genetic disorders and infectious diseases. J.P. Morgan and Credit Suisse acted as joint book-running managers for the offering. Cowen and Company is acting as co-lead manager and Wedbush PacGrow Life Sciences as co-manager…..Want to read more news? Click here for a free trial to The Health Care M&A Information Source and download the current issue today.
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Upcoming Interactive M&A Webcast:
Tax-Exempt Entities: Buying, Selling and Valuing
Thursday, August 8th, 2013, 1:00 pm ET
The not-for-profit merger and acquisition market — specifically not-for-profit health care businesses that acquire other not-for-profit health care businesses — is rapidly and continually evolving. Not-for-profit health care transactions are found primarily in what we identify as the health care services segment — hospitals and long-term care, in particular — while a handful are found in the allied health care technology segment comprised of the biotech, e-health, medical device and pharmaceutical sectors. Not-for-profits typically raise capital in different fashions and from different sources than for-profit entities. Our panel will discuss what drives this market, where and when to buy or sell, who’s buying what and what influences the valuation of the various not-for-profit businesses that make up this sector.
Go to http://www.levinassociates.com/conferences/1308-online-conference or call 800-248-1668 to register.
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