Lutheran Health Systems, Fargo, N.D., and Samaritan Health System, Phoenix, intend to raise about $400 million to complete their merger in late summer, officials said last week.
The systems have also chosen a company name, but they will not disclose it until the bond offering is issued in late August or early September, said Lutheran and Samaritan spokesmen. They said the deal is expected to close after the offering.
Proceeds will be used to refinance $285 million of Samaritan's debt and $60 million in other liabilities, and to fund previously planned capital improvements at Samaritan's four hospitals in Arizona, said Samaritan spokesman Dan Green.
Lutheran operates three hospitals in Arizona.
Samaritan and Lutheran's boards will meet in late June to give final approval to the deal, which was announced last December (Dec. 21, 1998, p. 4). The transaction would create a not-for-profit system with 32 acute-care hospitals in 14 states with combined annual revenues of more than $1.6 billion. The merged companies will be governed by a 14-member board with equal representation from Samaritan and Lutheran. Corporate offices will be in Fargo and Phoenix.
The proposed merger passed federal antitrust muster. The Federal Trade Commission allowed the 30-day review period for the deal to expire April 28 without taking action, Green said. The combined companies will own five acute-care hospitals in the Phoenix area.
State regulators will hold a public hearing June 7 to collect information about the deal for the Arizona attorney general's office, department of health services and corporation commission.
Green said a 1997 state law requires public hearings for hospital sales. He noted that the state attorney general could still challenge the deal on antitrust grounds but cannot use the public hearings to do so. The department of health services and the corporation commission do not have authority to block or approve the deal.