Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
Summary: Seventy-three percent of HCA Inc. shareholders voted to approve its $21.3b leveraged buyout yesterday which will take the #1 U.S. hospital chain private; it's the second largest LBO in history. While some shareholders filed lawsuits alleging they were not getting fair value, yesterday's vote, says CEO Jack Bovender, proves, "an overwhelming majority of the shareholders felt it was a fair price." Shareholders will get $51/share, an 18% premium on its price when the deal was first announced. Buyers will fund the deal with $16b of new debt, and assume HCA's existing $11.7b debt. HCA operates 172 hospitals and 95 freestanding surgery centers and outpatient service centers in 21 states, Britain and Switzerland. Recently, it has struggled with poor earnings, slow growth and escalating expenses. By going private and eliminating Wall Street scrutiny, buyers hope HCA will be able focus on cash flow rather than earnings. 17 years ago, a management-led buyout took HCA private for three years. Analysts say it's likely HCA could try to go public again in the next five to seven years. John Ransom of Raymond James: "The buyout investors have to realize their investment at some point. With a company like HCA, you either would have to take it public or sell it to another buyer."
Related links: Press release, website. Media coverage: Business Week, Boston Globe. Commentary: Credit-Default Swap Traders Profiting from Inside Info on LBOs? • Insider Trading Based on Credit Default Swaps Persists • Investors Watching Management-Led Buyouts • LBOs Making Executives Very, Very Rich • Jim Cramer on HCA
Potentially impacted stocks and ETFs: HCA Inc. (NYSE:HCA) • Competitors: Triad Hospitals Inc. (NYSE:TRI), Tenet Healthcare Corp. (NYSE:THC) • ETFs: iShares Dow Jones US Healthcare Provider (NYSEARCA:IHF)
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