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Thursday, May 20, 2010

Psychiatric Solutions Sold to Philly Based Universal Health Services For 3.1 Billion

Franklin-based Psychiatric Solutions Inc. is being purchased by Universal Health Services Inc. in a deal valued at $3.1 billion, the companies announced today.
The announcement ends months of speculation about who would buy PSI, which currently owns or leases 94 facilities in 32 states, Puerto Rico, and the U.S. Virgin Islands.
In March, PSI confirmed that it had formed a special committee of its board of directors and retained outside advisors to consider potential offers for the company.
That move followed a report in the Wall Street Journal that PSI was in talks to be acquired by Boston-based private equity firm Bain Capital, which is also a leading shareholder in Nashville-based HCA Inc.
It was “shortly thereafter” that UHS was invited to the table, UHS Chief Financial Officer Steve Filton said today in a call with analysts.
“Over the years, we have looked at many assets in smaller portfolios at substantially higher prices.” Filton said. “This transaction provides a unique opportunity to get a larger group of assets at a more attractive aggregate price.”
No one from PSI participated in the call. Other than a statement from Christopher Grant, chairman of PSI’s special committee, included in the press release, the company has been silent about the deal.
A spokeswoman at Rolling Hills Hospital in Franklin, PSI’s only Tennessee facility, referred requests for comment to the corporate headquarters, which did not return calls.
UHS said the combined company is expected to generate about $35 million to $45 million in annual cost savings. About 35 to 40 percent of that will come from salaries and “other related equity compensation” for PSI’s senior management, Filton said.
However, UHS CEO Alan Miller said, “We are familiar with some of the management at PSI and think there are a lot of very talented people there, and we look forward to working with them as well.”
Analysts were generally optimistic about the deal, which propels UHS to the No. 1 spot in the $20 billion a year behavioral health segment.
UHS will pay $33.75 per share, $2 billion total, in cash for PSI ­— and assume about $1.1 billion in PSI debt.

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