HealthSpan Partners, an affiliate of Cincinnati-based Bon Secours Mercy Health, and Brentwood, Tenn.-based Surgery Partners, amended their merger agreement after the ASC operator received an unsolicited proposal from an unnamed third party, according to a Nov. 9 press release from Surgery Partners.
Here are eight things to know:
- HealthSpan Partners raised its cash offer to $25 per share from $23.50, an increase of about 6.4%. The amended deal represents an enterprise value of up to about $6 billion, compared with the original $5.7 billion deal announced Oct. 26.
- The amendment adds a “ticking fee.” If Surgery Partners stockholders approve the deal before March 1, 2027, but it has not closed by then, they will receive additional monthly cash payments at a 10% annual rate on the $25 price. The fees total up to $1.61 per share, for a maximum of $26.61 per share if the deal closes on the Oct. 23, 2027, outside date. The $6 billion enterprise value of the updated transaction reflects that maximum.
- The third-party proposal, received Nov. 3 and updated Nov. 8, is nonbinding and offers $28 per share in cash for all outstanding shares of Surgery Partners. That is 12% above the amended $25 base price and about 19.1% above the original $23.50 offer.
- Surgery Partners’ special committee, which is made up of independent and disinterested directors, unanimously determined the $28 proposal was not a “Superior Proposal” under the merger agreement. It cited a closing expected to take materially longer or possibly not happen, greater regulatory risk and complexity than a deal with HealthSpan, and a lack of contractual protections.
- Surgery Partners CEO Eric Evans said the deal provides regulatory certainty and a closing expected in the near term, along with “exceptional value for our stockholders.” The board approved the amendment on the special committee’s recommendation and reaffirmed its recommendation that stockholders vote in favor at a special meeting.
- Bain Capital, Surgery Partners’ largest stockholder with about 39% of outstanding shares, signed a voting and support agreement to vote in favor of the HealthSpan merger. The release says that agreement remains in place.
- Bain Capital affiliates will receive no cash, including ticking fees. They will roll their shares into equity in the acquiring entity and remain a significant partner in Surgery Partners after closing.
- The deal is still expected to close in the first quarter of 2027, pending stockholder and regulatory approvals.
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