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Tenet Healthcare Buys Vanguard Health for $1.8 Billion Cash and Assumes $2.5 Billion in Debt

Posted Jun 24 2013 12:23pm

Not too long ago, Community Health was trying to take over Tenet and that didn’t work and they were pretty aggressive and ended up giving up their efforts.  It was hot news for a while and ended up with Tenet filing a lawsuit against Community stating they were inflating hospital admissions in 2011.

Community Health Offers $3.3 Billion With A Non Solicited Bid for Tenet Healthcare
Tenet Tells Community Health Thanks But No Thanks in Response to Their Submission of 10 Nominees for Tenet’s Board of Directors

Now Tenet is in the drivers seat per se with buying Vanguard Health Systems.  They are assuming twice the amount of debt than what is indicated in the purchase amount.   Tenet themselves lost money in the first quarter of this year due to a lower number of admissions.  A few years ago Vanguard sold some of their hospitals to Prime Healthcare here in Orange County.  La Palma and Huntington Beach hospitals were two of the medical centers sold.

Tenet Healthcare Loses $88 Million First Quarter 2013–Admissions Drop, Algorithmic Models Of Insurers Transferring Risk to Patients and Providers Not Working, Why? No Money

Blackstone is a money winner here as the largest single investor.  Vanguard did an IPO a couple years ago and remained a “controlled” company.  In addition Tent also recently announced opening a regional office in Atlanta so perhaps this was preparing for the acquisition.  BD


Tenet Healthcare said on Monday that it had agreed to acquire Vanguard Health Systems for roughly $1.8 billion in a deal that will put Tenet into new markets.

Tenet’s offer of $21 in cash for every Vanguard share represents a premium of 70 percent over Vanguard’s closing stock price on Friday. Tenet will also assume $2.5 billion in Vanguard debt.  A big winner in the deal is the Blackstone Group, which owns 37.9 percent of Vanguard as of the end of March. The biggest shareholder of Tenet is the hedge fund manager Larry Robbins’ Glenview Capital, which owns a 9.51 percent stake, after selling some four million shares as May 14

Based in Nashville, Vanguard owns and operates 28 acute care hospitals with 7,081 licensed beds in San Antonio, Harlingen and Brownsville in Texas; metropolitan Detroit; metropolitan Phoenix; metropolitan Chicago; and in Massachusetts. The company also owns managed health plans in Chicago; Detroit; Harlingen, Tex.; and Phoenix, and it has two surgery centers in Orange County in California.

Tenet, based in Dallas, has 49 hospitals with a total of 13,180 licensed beds and 122 outpatient centers. It also owns Conifer Health Solutions.

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