The Federal Trade Commission said last week it will seek a federal court injunction to block Mediq's planned $138 million purchase of Universal Hospital Services because the deal would violate antitrust laws.
Pennsauken, N.J.-based Mediq and Bloomington, Minn.-based UHS are the nation's leading equipment leasing companies, providing respiratory, infusion and monitoring devices to hospitals.
The FTC's five commissioners voted unanimously last week to instruct the agency to block the deal, saying it would give Mediq a "monopoly for national customers" and a dominant share of regional customers. A combined company would mean higher medical equipment rental prices for hospitals, the FTC said.
In a joint statement, Mediq and UHS vowed to "vigorously oppose" any government attempt to halt the deal. In their merger proxy the companies said the combined scale of the companies would lead to lower prices for customers.
Last year, UHS' board decided to put the company on the block after a series of earnings disappointments. In February, Mediq agreed to buy UHS for about $138 million. Two months later, the FTC launched an antitrust investigation of the proposed acquisition (April 14, p. 4).
As of late last week the FTC had not yet filed the injunction request or entered a formal antitrust complaint against the two companies with a federal administrative law judge assigned to the FTC.
Although both actions typically occur soon after the FTC's commissioners vote to block a deal, the delay does allow time for targeted companies to reassess their position or consider a settlement.
Michael Sandler, senior vice president for finance at Mediq, confirmed the companies are talking with FTC staff. "We're hopeful that we won't have to take this to court," he said.
If the FTC does go to court and succeeds in gaining a temporary restraining order, the commission would have 20 days to issue an administrative complaint that would explain the alleged antitrust violations in detail and begin a formal trial.
The FTC said that at trial it would provide "declarations from large hospitals, hospital chains and group purchasing organizations" that Mediq and UHS are the only "viable suppliers" of equipment rental services.