BofA Finances Tenet Acquisition of Vanguard Health
Tenet Healthcare and Vanguard Health Systems have signed a definitive agreement whereby Tenet will acquire Vanguard for $21 per share in an all cash transaction. The acquisition is valued at $4.3 billion including the assumption of $2.5 billion in Vanguard debt.
Tenet expects the transaction to be accretive to earnings in the first year. Anticipated annual synergies are $100 million to $200 million. Both boards of directors have unanimously approved the transaction, and Tenet has secured fully committed financing from Bank of America Merrill Lynch.
Gibson Dunn & Crutcher served as Tenet’s legal counsel and Lazard acted as lead financial and strategic advisor. Bank of America Merrill Lynch, Barclays and Teneo Capital also served as advisors for Tenet.
Skadden, Arps, Slate, Meagher & Flom served as Vanguard’s legal counsel and JP Morgan acted as exclusive financial and strategic advisor.
“This unique strategic transaction will bring together organizations that share a common commitment to providing high quality care and create significant new growth prospects for Tenet,” said Trevor Fetter, president and chief executive officer, Tenet. “This acquisition will take Tenet into new geographic markets, expand the breadth of our service offerings, diversify our earnings sources and increase the benefits we expect to realize under healthcare reform. This acquisition will also include a substantial contribution from the application of Conifer’s capabilities to Vanguard’s operations. We expect additional financial contributions to come from supply costs savings and labor management efficiencies.”
The acquisition, which is expected to close before the end of 2013, is subject to customary closing conditions and regulatory approvals. Upon closing, Charlie Martin, Vanguard’s founder, chairman and chief executive officer, will join Tenet’s Board of Directors. Keith Pitts, Vanguard’s vice chairman, will join the Tenet senior management team as vice chairman.
Fetter added, “Tenet’s board and I are delighted that Charlie and Keith will be joining Tenet. They are experienced healthcare executives for whom we have great respect. We hope to retain other members of Vanguard’s management team and look forward to engaging with them now that the acquisition has been announced.”
Martin said, “This combination will establish a much larger, stronger, and flexible industry-leading healthcare organization. The cultures of our two companies are a great fit and we share a vision of creating better health and healthcare system that will lead us through the coming changes. Our leaders and operators are innovative and forward-thinking, and certainly an attractive complement to the Tenet management team.