DaVita Inc. (DVA: Quote), an operator of kidney dialysis centers, Monday said it has agreed to acquire HealthCare Partners, LLC for about $4.42 billion in a cash and stock deal. The companies expect to close the transaction early in the fourth quarter of this year.
The purchase price consists of $3.66 billion in cash and nearly 9.38 million shares of DaVita common stock. The shares had a value of $758 million based on the closing price of DaVita's stock on May 18.
Upon completion of the merger, HealthCare Partners will operate as a separate subsidiary of DaVita HealthCare Partners. The combined company will be named DaVita HealthCare Partners Inc.
As an additional consideration, DaVita will also pay to the owners of HealthCare Partners a total of up to $275 million in cash if certain performance targets are achieved in 2012 and 2013 by the HealthCare Partners subsidiary of DaVita HealthCare Partners.
HealthCare Partners, with operations in Southern California, Central Florida and Southern Nevada, provides professional services rendered by primary care and specialty physicians as well as coordination of hospital and other services. It had 2011 revenue of about $2.4 billion and EBITDA of $527 million.
Kent Thiry, chairman and CEO of DaVita stated, "We believe our combined enterprise will offer new and exciting levels of clinical quality, service, and consumer/taxpayer savings...This combination will create a unique patient- and physician-focused organization."
Further, DaVita noted that senior management team of the current HealthCare Partners has committed to stay and continue to manage the existing business. Robert Margolis, MD, chairman and CEO of HealthCare Partners will join the board of directors and become co-chairman of the combined enterprise alongside Thiry.
DaVita expects to fund the cash portion through a combination of available cash, additional borrowings under its existing senior secured credit facilities and additional debt financing.
JP Morgan Securities, LLC. served as financial advisor, Morrison & Forrester LLP as lead counsel, and Sheppard Mullin Richter & Hampton LLP as regulatory counsel to DaVita. Munger, Tolles & Olson, LLP and Nossaman LLP served as legal advisors to HealthCare Partners.
DVA closed Friday's regular trading at $80.81 on the NYSE.
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by RTT Staff Writer
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