The American Hospital Association is poised to buy one or several new businesses following the sale late last month of its stock in MMI Cos.
The AHA turned a quick profit of nearly $11 million in the deal, which it previously said would help finance the acquisition of up to four new businesses whose products and services it would market directly to its membership.
The association sold its approximately 950,000 shares of MMI common stock for $30.25 per share on Sept. 25, raising about $28.7 million in capital for the Chicago-based hospital trade group. That represents a nearly 60% increase in the value of stock, which was worth $18 million when the AHA obtained it 16 months ago.
MMI announced the pending stock sale in a Sept. 19 press release, but the association has made no announcement of the transaction to date. The sale closed six days later.
The AHA obtained the stock from MMI when the Deerfield, Ill.-based risk management company acquired the association's liability insurance company in May 1995. MMI paid the AHA $33 million for Health Providers Insurance Co., which sold excess layers of liability insurance to about 2,000 hospitals. Some $15 million of that was in cash, and the balance was in MMI stock.
The AHA initially said it was planning to hold onto the MMI stock as a long-term investment, but MODERN HEALTHCARE*disclosed in January that the association was planning to sell the stock to finance a business expansion plan. Specifically, the AHA's stated intentions are to buy as many as four different companies in 11 potential areas of business for a total of $40 million.
The AHA continued to downplay its acquisition strategy throughout the year but, in fact, has considered and rejected a number of potential deals. In August, the association confirmed that an acquisition was likely "in close proximity" to the stock sale.
Richard Wade, the AHA's senior vice president for communications, said, "We are looking at some things, but nothing has been signed yet."