HCA Inc., the nation’s largest hospital chain and part-owner of HealthONE, the state’s largest for-profit hospital system, has agreed to be acquired by a group of investors for about $21 billion, marking the biggest leveraged buyout in the history of corporate America.
HealthONE, a 50-50 joint venture between publicly-traded HCA of Nashville, Tenn. and nonprofit HealthONE Alliance, operates seven metro-area hospitals, including Presbyterian/St. Luke’s Medical Center and Rose Medical Center. It’s unclear how the deal will impact HealthONE’s Colorado operations, which employed an estimated 8,700 people as of last year.
HCA-HealthONE announced in November that it would put $250 million into face-lifts and expansions of area hospitals over the next three years, including a new 54-bed children’s hospital downtown.
The buyout offer, announced today, came from a consortium of private equity groups: Bain Capital LLC, Kohlberg Kravis Roberts & Co., Merrill Lynch & Co. and HCA co-founder Thomas F. Frist Jr., brother of Senate majority leaders Bill Frist of Tennessee.
The deal, which includes the assumption of $11.7 billion in HCA debt, puts the transaction’s total value at $33 billion, the largest leveraged buyout ever. That tops KKR’s $31 billion buyout in 1989 of RJR Nabisco, a deal immortalized in the book “Barbarians at the Gate: The Fall of RJR Nabisco.”
Shares of HCA jumped 3 percent, or $1.45, to $49.32 in mid-day trading.
HCA’s board has approved the deal and recommended it to HCA’s shareholders.
“This transaction will position the company to continue its tradition of high-quality service provided with genuine caring,” Thomas Frist said in a statement. “In addition, the transaction will position the company and its employees for sustained future success.” HCA said it will solicit better proposals during the next 50 days. Barring any new offers, the company expects the deal to be completed in the fourth quarter.
Last year, federal prosecutors and the Securities and Exchange Commission launched an investigation of the senator’s sale of HCA stock from his blind trusts. The sale occurred in June 2005 near the 52-week peak of HCA share’s price and shortly before the stock fell 9 percent.
Bill Frist, who is considering a 2008 run for president, said he sold the stock to avoid the appearance of a conflict of interest.
HCA owns or operates 176 hospitals, 92 freestanding surgery centers and facilities for outpatient and ancillary services in 21 states, England and Switzerland.
Locally, HealthONE’s facilities include the Medical Center of Aurora, North Suburban Medical Center in
Thornton, Presbyterian/St. Luke’s Medical Center in Denver, Rose Medical Center in
Denver, Sky Ridge Medical Center in Lone Tree, Spalding Rehabilitation Hospital in
Aurora and Denver, Swedish Medical Center in Englewood, nine surgical centers, more than
30 occupational, sports, specialty and outpatient diagnostic imaging clinics, and
Airlife, which provides critical-care air and ground transportation for the HealthOne
system.
Post wire services contributed to this report.
