HCA Stockholders to Receive $51 per Share; Transaction Valued at $33 Billion
NASHVILLE, Tenn., July 24 /PRNewswire-FirstCall/ -- HCA (NYSE: HCA), a
leading health care services company, and Bain Capital, Kohlberg Kravis
Roberts & Co., and Merrill Lynch Global Private Equity announced today the
execution of a definitive merger agreement under which affiliates of the
private equity sponsors and HCA Founder Dr. Thomas F. Frist, Jr. will acquire
HCA in a transaction valued at approximately $33 billion, including the
assumption or repayment of approximately $11.7 billion of debt.
Under the terms of the agreement, HCA stockholders will receive $51 in
cash for each share of HCA common stock they hold, representing a premium of
approximately 18% to HCA's closing share price on July 18, 2006, the last
trading day prior to press reports of rumors regarding a potential acquisition
The board of directors of HCA, on the unanimous recommendation of a
special committee comprised entirely of disinterested directors, has approved
the merger agreement and has resolved to recommend that HCA's stockholders
adopt the agreement.
In the event the transaction closes, members of HCA's senior management
team have also agreed to reinvest a portion of their HCA equity into the
acquiring entity or an affiliate thereof. Dr. Thomas Frist, Jr. and certain
related persons have reached agreements to vote their shares in favor of the
Jack O. Bovender, Jr., HCA Chairman and CEO, said, "After careful
analysis, the special committee and the board have endorsed this transaction
as being in the best interests of our shareholders. We are very pleased to
have an experienced group of investors who are committed to maintaining our
company's culture of a patients-first approach to high quality, compassionate
care. They are also committed to the welfare of our colleagues across the
company who carry out that mission every day. These are the principles on
which HCA was founded."
Pending the receipt of stockholder approval and expiration of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as well
as satisfaction of other customary closing conditions, the transaction is
expected to be completed in the fourth quarter of 2006. The transaction will
be financed through a combination of equity contributed by the private equity
consortium, Dr. Thomas Frist, Jr., and members of management, and debt
financing that has been committed by Bank of America, Citigroup Global
Markets, JPMorgan, and Merrill Lynch Capital Corporation, subject to customary
There is no financing condition to the obligations of the private equity
consortium to consummate the transaction.
Under the merger agreement, HCA may solicit superior proposals from third
parties during the next 50 days. In accordance with the agreement, the board
of directors of HCA, through its special committee and with the assistance of
its independent advisors, intends to actively solicit superior proposals
during this period. HCA advises that there can be no assurance that the
solicitation of superior proposals will result in an alternative transaction.
HCA does not intend to disclose developments with respect to the solicitation
process unless and until its board of directors has made a decision.
"This is a truly landmark deal, and we are pleased to partner with the
management team led by Jack Bovender, Dr. Thomas Frist, Jr. and our fellow
equity sponsors," said Stephen Pagliuca, a Managing Director at Bain Capital.
"HCA is the largest and most sophisticated operator in the U.S. hospital
industry, delivering high quality and cost effective healthcare as well as a
track record of consistent growth. We look forward to putting our extensive
healthcare experience to work in order to support management in growing this
Michael Michelson, a Member of KKR, stated, "HCA provides world class
patient care on a unique scale in this country and is an indispensable part of
the communities it serves. We are delighted to be joining with HCA's talented
management, Dr. Thomas Frist, Jr., and our private equity partners to continue
to build the company's franchise of high quality clinical care. KKR's
experienced healthcare team looks forward to providing strong support for
HCA's future growth, including continuing to invest substantial capital in its
Dr. Thomas Frist, Jr. said of the pending transaction, "This transaction
will position the company to continue its tradition of high-quality service
provided with genuine caring. In addition, the transaction will position the
company and its employees for sustained future success."
Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. Incorporated
are acting as financial advisors to the special committee. Credit Suisse and
Morgan Stanley have each delivered a fairness opinion to the special
committee. Shearman & Sterling LLP is acting as legal advisor for the special
committee and Bass Berry & Sims PLC is acting as legal advisor for HCA.
Merrill Lynch & Co. acted as lead M&A advisor, and Banc of America
Securities LLC, Citigroup Global Markets, and JPMorgan acted as M&A advisors,
to the private equity consortium. Simpson Thacher & Bartlett LLP is acting as
legal advisor to the private equity consortium.
The transaction does not require the consent of the Company's unsecured
noteholders. It is currently intended that substantially all of the Company's
8.850% Medium Term Notes due 2007, 7.000% Notes due 2007, 7.250% Notes due
2008, 5.250% Notes due 2008 and 5.500% Notes due 2009 (or an equivalent
amount of the Company's other existing notes) will either be tendered for or
repaid. The transaction is not, however, conditioned upon any such tender or
repayment. The Company's remaining unsecured notes are expected to remain
outstanding and will not be equally and ratably secured with the new debt
raised to finance the transaction.
HCA Inc. is a holding company whose affiliates own and operate hospitals
and related health care entities. The term "affiliates" includes direct and
indirect subsidiaries of HCA Inc. and partnerships and joint ventures in which
such subsidiaries are partners. At June 30, 2006, these affiliates owned and
operated 176 hospitals, 92 freestanding surgery centers and facilities which
provided extensive outpatient and ancillary services. Affiliates of HCA Inc.
are also partners in joint ventures that own and operate seven hospitals and
seven freestanding surgery centers which are accounted for using the equity
method. The Company's facilities are located in 21 states, England and
About Bain Capital
Bain Capital is one of the world's leading private investment firms, with
over 20 years of experience in management buyouts, and offices in Boston, New
York, London, Munich, Hong Kong, Shanghai and Tokyo. For more information,
KKR is one of the world's oldest and most experienced private equity firms
specializing in management buyouts, with offices in New York, Menlo Park,
California, London, Paris, Hong Kong and Tokyo. For more information, visit
About Merrill Lynch Global Private Equity
Merrill Lynch Global Private Equity is the private equity investment arm
of Merrill Lynch & Co, Inc. For more information visit www.ml.com.
Important Additional Information will be Filed with the SEC
In connection with the proposed merger, HCA will file a proxy statement
with the Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS
ARE ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER AND THE PARTIES THERETO.
Investors and security holders may obtain a free copy of the proxy statement
(when available) and other documents filed by HCA at the Securities and
Exchange Commission's Web site at http://www.sec.gov. The proxy statement and
such other documents may also be obtained for free from HCA by directing such
request to HCA Inc., Office of Investor Relations, One Park Plaza, Nashville,
Tennessee 37203, telephone: (615) 344-2068.
HCA and its directors, executive officers and other members of its
management and employees may be deemed to be participants in the solicitation
of proxies from its stockholders in connection with the proposed merger.
Information concerning the interests of HCA's participants in the
solicitation, which may be different than those of HCA stockholders generally,
is set forth in HCA's proxy statements and Annual Reports on Form 10-K,
previously filed with the Securities and Exchange Commission, and in the proxy
statement relating to the merger when it becomes available.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements based on current
HCA management expectations. Those forward-looking statements include all
statements other than those made solely with respect to historical fact.
Numerous risks, uncertainties and other factors may cause actual results to
differ materially from those expressed in any forward-looking statements.
These factors include, but are not limited to, (1) the occurrence of any
event, change or other circumstances that could give rise to the termination
of the merger agreement; (2) the outcome of any legal proceedings that may be
instituted against HCA and others following announcement of the merger
agreement; (3) the inability to complete the merger due to the failure to
obtain stockholder approval or the failure to satisfy other conditions to
completion of the merger, including the receipt of stockholder approval and
expiration of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976; (4) the failure to obtain the necessary debt
financing arrangements set forth in commitment letters received in connection
with the merger; (5) risks that the proposed transaction disrupts current
plans and operations and the potential difficulties in employee retention as a
result of the merger; (6) the ability to recognize the benefits of the merger;
(7) the amount of the costs, fees, expenses and charges related to the merger
and the actual terms of certain financings that will be obtained for the
merger; and (8) the impact of the substantial indebtedness incurred to finance
the consummation of the merger. Many of the factors that will determine the
outcome of the subject matter of this press release are beyond HCA's ability
to control or predict. HCA undertakes no obligation to revise or update any
forward-looking statements, or to make any other forward-looking statements,
whether as a result of new information, future events or otherwise.
CONTACT: Investors, Mark Kimbrough, 615-344-2688, or
both of HCA