TENET HEALTHCARE: TO ACQUIRE ORNDA HEALTHCORP
Santa Barbara, CA-based Tenet Healthcare Corp. is expectedThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
to announce today an agreement to acquire OrNda Healthcorp. for
$1.82 billion in stock, WALL STREET JOURNAL reports. Tenet,
the "nation's second-largest hospital company," would assume
about $1.3 billion of OrNda's debt to create a "hospital chain
with $8.5 million in revenue and 126 hospitals in 22 states."
Tenet currently owns 76 hospitals in 13 states. Nashville, TN-based
OrNda, "the third-largest investor-owned hospital company," owns
50 hospitals in 15 states. JOURNAL reports that the deal, which
comes less than two years after Tenet acquired American Holdings
Inc. for $2 billion, "underscores the pressures on health care
companies to grow big enough to compete in a consolidating
COMMON MARKETS: JOURNAL reports that the acquisition of
OrNda "would strengthen Tenet's competitive position against"
Nashville-based Columbia/HCA Healthcare Corp., the nation's
largest hospital owner. The deal "will bolster" Tenet's
operations in Texas, Florida and Southern California. "We will
be the largest integrated provider system in Southern
California," said Jeffrey Barbakow, chairman and CEO of Tenet.
The system will add 16 hospitals to Tenet's current 13 in
Southern California, he added. Charles Martin, OrNda chairman,
president and CEO, said, "We're in common markets with Tenet but
in a way that's complementary rather than competitive." He added
that although the companies both have southern Florida hospitals,
they are distant enough that they are not in direct competition.
JOURNAL reports that Martin "doesn't expect the combination to
raise antitrust concerns."
CHANGES: "The transaction is expected to save $70 million
through corporate overhead reductions, reduced interest expenses
and network consolidations" during the first year. The
agreement, signed yesterday by both companies, is subject to
shareholder and regulatory approval. The transaction is expected
to be completed by the end of March (Rundle/Lipin, 10/17).