Vencor and Charter Behavioral Healthcare Corp. have terminated their agreement to sell Vencor's stake in Behavioral Healthcare Corp. to Charter.
They declined to disclose the reason for the termination other than to say the decision was mutual.
In September Atlanta-based Charter, the nation's largest psychiatric hospital chain, agreed to buy Behavioral from Vencor and private investors for about $230 million.
Louisville, Ky.-based Vencor, which owns a 61% ownership interest in Behavioral, would have received $140 million in cash for the sale. It had planned to use the proceeds to pay off debt.
The other 39% of Behavioral's shares are privately held by various institutional investors who didn't disclose their proposed financial terms.
The investors' agreements to sell their interest in Behavioral to Charter also have been called off, said Joel Weiden, a Charter spokesman.
Vencor, a long-term-care company, picked up its stake in Behavioral in June when it acquired Las Vegas-based Transitional Hospitals Corp, formerly called Community Psychiatric Centers. CPC had acquired 61% of Behavioral's stock as part of its agreement to sell 25 of its psychiatric hospitals to Behavioral last year. Behavioral operates 47 mental health facilities.
The breakup is not expected to have a significant effect on Vencor's earnings.
Frank Morgan, an analyst with J.C. Bradford in Nashville, said the deal may have unraveled because Vencor did not like Charter's terms for the sale. Though Charter initially offered to pay all cash for Vencor's stake, it reportedly changed its offer to a mix of cash and securities. Morgan said another reason might have been Vencor's announcement that it plans to report lower-than-expected fourth-quarter earnings.