Private-equity firm to acquire Prospect Medical

Prospect Medical Holdings, Los Angeles, said it has agreed to be acquired by private-equity firm Leonard Green & Partners for cash and debt assumption worth a total of $363 million. Prospect operates three hospitals with five campuses and also an independent practice association.

The deal is subject to shareholder and regulatory approval, but not a financing condition, according to Prospect. Leonard Green will pay $8.50 per share for Prospect, a 29.4% premium over its volume-weighted average price for the past 30 trading days, and will take on approximately $158 million in Prospect debt.

Four directors and officers of the company, including Sam Lee, its chairman and CEO, have agreed to vote their 10.4 million shares in favor of the deal. Their holdings are nearly 50% of the company's outstanding shares. For 6.2 million of these shares, these four individuals will receive equity in the affiliate of Leonard Green that is scheduled to acquire Prospect, rather than cash.

Leonard Green does not list any previous healthcare service providers among the investments listed on its website. Current investments in healthcare include the firm's stakes in drugstore chain Rite Aid Corp. and IMS Health, which provides market data to pharmaceutical companies.