The health care industry kicked off the week with a pair of large deals that provided work for several Am Law 100 firms.
Gibson, Dunn & Crutcher is representing Dallas-based hospital operator Tenet Healthcare Corp., which said Monday it has agreed to acquire smaller rival Vanguard Health Systems—itself advised by Skadden, Arps, Slate, Meagher & Flom—in a deal worth $4.3 billion, including assumed debt.
Also announced Monday is buyout firm KKR's purchase of Raleigh, North Carolina–based PRA International, which performs clinical laboratory tests for pharmaceutical and biotechnology companies, from Genstar Capital. KKR is represented by frequent counsel Simpson Thacher & Bartlett in that deal—worth a reported $1.3 billion, according to The New York Times—while Latham & Watkins is advising PRA and Genstar.
Tenet is paying $21 in cash for each share of Nashville-based Vanguard—a premium of 70 percent over the target's Friday closing price—for a total of $1.8 billion. Tenet will also assume $2.5 billion worth of Vanguard debt. The deal is expected to close by the end of the year.
Tenet says the deal will help the company expand into new geographic markets and increase expected benefits from the coming federal health care overhaul that will increase the number of insured Americans who will be paying for medical care. The acquisition of Vanguard—which owns hospitals located across the United States—will increase the number of hospitals Tenet owns from 49 to 79 and the number of outpatient facilities from 126 to 157.
Gibson Dunn's team advising Tenet is led by New York–based corporate partners Barbara Becker and Dennis Friedman, who are working with finance partner Aaron Adams and corporate associate Saee Muzumdar. Audrey Andrews serves as Tenet's general counsel.
Gibson Dunn's past work for Tenet includes helping the hospital operator fend off a $4 billion hostile takeover bid from Community Health Systems two years ago.
Skadden is representing Vanguard with a team that includes M&A partners Joseph Coco and Peter Serating, as well as executive compensation and benefits partner Regina Olshan, all in New York. Chicago-based tax partner John Rayis is also advising. Vanguard's general counsel is James Spalding.
Also landing a role on the deal is Simpson Thacher, with New York–based corporate partner Wilson Neely advising longtime client The Blackstone Group. Blackstone is Vanguard's largest shareholder, with a 37.9 percent stake, and Bloomberg reports the private equity firm will net about $617 million as a result of the deal. Earlier this month, Simpson Thacher represented a Blackstone affiliate on its $665 million purchase of a Brazilian residential development. And in 2011 the firm represented Vanguard on its $450 million initial public offering.
(Davis Polk & Wardwell corporate partner John Bick, along with law clerk Daniel Brass, is advising Morgan Stanley Capital Partners—a minority shareholder in Vanguard—in connection with the sale to Tenet.)
Simpson Thacher was also involved in Monday’s other health care deal, in which KKR agreed to acquire PRA from fellow private equity firm Genstar. The terms of that deal were not disclosed. The Times reports that KKR bid about $1.3 billion to win an auction process and land PRA from Genstar, which paid $797 million for the company in 2007. PRA has more than 5,300 employees and performs clinical trials in more than 80 countries.
The deal is expected to close in the third quarter, pending regulatory approvals.
Simpson Thacher advised KKR with a team that includes M&A partner Sean Rodgers; credit partner James Cross; antitrust partner Joseph Tringali; compensation and benefits partner Andrea Wahlquist; IP partner Lori Lesser; tax partner Steven Todrys; environmental senior counsel Adeeb Fadil; and real estate counsel Krista McManus. Associates on the deal are Ravi Agarwal, Ellen Frye, Daniel Kay, Jeannine McSweeney, Sarah Naseman, Phong Quan, Marcela Robledo, Jodi Sackel, Eric Wolf, and Andrew Wolstan. Summer associates on the deal are Jessica Asrat, Alyssa Martin, and Charles Warthen.
Both KKR and Blackstone are among Simpson Thacher's stable of frequent private equity clients. The firm represented KKR earlier this month on the buyout firm's acquisition of British water supplier South Staffordshire Plc from Alinda Capital Partners for an undisclosed amount. In March, Simpson Thacher advised KKR on its $716 million sale of Japanese staffing and recruitment company Intelligence Holdings to Temp Holdings Co.
For their part, PRA and Genstar have brought in a Latham team led by corporate partners Scott Haber and Luke Bergstrom in San Francisco and Silicon Valley, respectively. Tax partner Kirt Switzer and benefit and compensation counsel Scott Thompson are also advising, along with associates Una Au, Daniel Cunha, and Ashley Wagner.
In 2011, Haber represented Genstar in its purchase of specialty fasteners manufacturer MW Industries for an undisclosed amount.