Two private-equity firms have agreed to acquire Triad Hospitals, Plano, Texas, in a $6.4 billion deal that includes $4.7 billion in cash and $1.7 billion in assumed debt. Triad also announced that its fourth-quarter results will be hit by charges related to bad-debt expense. The deal requires approval by shareholders at a special meeting. Triad retains the right to solicit superior offers for the next 40 days. The private-equity firms are CCMP Capital Advisors and GS Capital Partners. CCMP was formed in August 2006 by former members of the buyout group at JPMorgan Partners, the private equity division of JPMorgan Chase. GS Capital Partners is the private-equity arm of investment bank Goldman Sachs. The deal fulfills speculation about a buyout of Triad that has been growing for months. The speculation was fueled by the companys stock price languishing below $40 a share and rising investor criticism, in particular by TPG-Axon Capital Management, which owns an 8.9% stake in the company. The private-equity firms are offering $50.25 per share, a 16% premium on the value of Triad shares as of Fridays close of trading and a 36% premium on the low point the stock hit in late October 2006 as takeover speculation increased.
Triad said it will take three pretax charges totaling $68 million related to bad-debt expense, leading to earnings of 42 cents to 44 cents per share. The average of stock analysts estimates was for earnings of 55 cents per share. Triads fourth-quarter results were boosted by a pretax reduction of $25 million in its medical malpractice reserves. Triad said same-facility inpatient admissions increased 3.1% compared with the fourth-quarter of 2005. In light of the buyout deal, Triad said the company will not make a separate release of earnings and will not discuss the results on a conference call. Triad will report earnings more fully in its annual 10-K filing with the Securities and Exchange Commission, which Triad said will be filed no later than March 1. Triad owns or operates 53 hospitals and 13 ambulatory surgery centers in 17 states. -- by Vince Galloro