One week after announcing strong earnings for the first quarter—as well as a subpoena from the Justice Department in that same period—Psychiatric Solutions has found a buyer in King of Prussia, Pa.-based Universal Health Services, which has offered to acquire the company for about $2 billion in cash and another $1.1 billion in debt, the companies announced early Monday.
Universal Health to buy Psychiatric Solutions
In March, Franklin, Tenn.-based Psychiatric Solutions said it had been approached by third parties for a possible sale, and analysts have mentioned Universal Health Services as a potential suitor.
“Again, it has been known for roughly two months that the company was for sale, so we believe UHS' cash bid (which was approved by both the Psychiatric Solutions' special committee and the UHS board of directors) is final,” according to a research note from analyst Ryan Daniels of William Blair & Co. in Chicago.
According to a joint news release, Psychiatric Solutions has 94 facilities in 32 states, Puerto Rico and the U.S. Virgin Islands, while UHS owns or operates 25 acute-care hospitals and 102 behavioral healthcare facilities and schools in 32 states, the District of Columbia and Puerto Rico.
“This transformative transaction is very compelling for shareholders, patients and employees of both companies, and we are excited to add PSI's assets to our portfolio,” said Alan Miller, CEO and chairman of the board of UHS. “The combination with PSI will further strengthen our behavioral health division, which has already grown substantially through capacity expansion and strategic acquisitions. Importantly, the combined company will have ample opportunities for further growth in both the acute care and behavioral healthcare sectors.”
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