LBO of Hospital Operator HCA Falls Apart

Jul.19.06 | About: HCA Holdings, (HCA)

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

Buyout of Hospital Firm HCA Unravels in Final Stages of Talks

  • Summary: A private-equity leveraged buyout of the nation's largest hospital operator, HCA, fell apart in its final stages, as the two sides failed to bridge a 10% gap in the deal price. HCA, with a market cap of $17.6 billion, is hampered by a debt load of $11 billion that made the financing and purchase of the hospital operator particularly difficult. 'The bidders were a group that included Bain Capital; Kohlberg Kravis Roberts & Co.; Merrill Lynch Private Equity and the family of Senate Majority Leader Bill Frist, whose father, Thomas Frist, and brother, Thomas Frist Jr., founded HCA.' HCA and other large hospital operators have been hurt recently by low admission numbers and growing debt due to non-insured and under-insured patients. HCA insiders, including Mr. Frist, have recently come under investigation for insider sales.
  • Comment on related stocks/ETFs: HCA stock has slid all year, and will likely slide again today on this news. Wall Street has been awaiting a private equity deal of this magnitude, but apparently this won't be it.