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U.K. competition authority puts a potential wrench in Acadia's takeover of Priory Group, approval of deal could be delayed nine months; shares down 3%

  • Acadia Healthcare (ACHC -2.7%) eases on light volume in response to its announcement that the U.K.'s Competition and Markets Authority (CMA) is having a bit of a problem with its acquisition of Priory Group, a leading provider of behavioral healthcare services there. Acadia finalized its purchase of the firm from private equity outfit Advent International for $2.2B in February.
  • CMA is apparently concerned about the potential lessening of competition regarding the delivery of behavioral healthcare services in certain markets. At present, it has categorized its investigation as Phase 2, which is a more in-depth assessment of the merger than a Phase 1 assessment that will take ~nine months to complete. During this period, the "hold-separate" requirements will remain in place.
  • CEO Joey Jacobs says, "We are disappointed by the CMA's decision to refer this transaction for a Phase 2 investigation. We fully intend to explore how best to satisfy the CMA's concerns and to respond to the CMA with our undertakings prior to the deadline of July 21. If we provide undertakings, we expect the CMA will communicate its response [ ] by July 28."
  • Management will host a conference call at 10:30 am ET to discuss the situation.

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