HCA Enters Into Merger Agreement With Private Equity
Consortium
HCA Stockholders to Receive $51 Per Share; Transaction
Valued at $33 Billion
Nashville, Tenn., July 24, 2006 —
HCA (NYSE: HCA), a leading health care services company,
and Bain Capital, Kohlberg Kravis Roberts & Co., and
Merrill Lynch Global Private Equity announced today
the execution of a definitive merger agreement under
which affiliates of the private equity sponsors and
HCA Founder Dr. Thomas F. Frist, Jr. will acquire HCA
in a transaction valued at approximately $33 billion,
including the assumption or repayment of approximately
$11.7 billion of debt.
Under the terms of the agreement, HCA stockholders
will receive $51 in cash for each share of HCA common
stock they hold, representing a premium of approximately
18% to HCA's closing share price on July 18, 2006, the
last trading day prior to press reports of rumors regarding
a potential acquisition of HCA.
The board of directors of HCA, on the unanimous recommendation
of a special committee comprised entirely of disinterested
directors, has approved the merger agreement and has
resolved to recommend that HCA's stockholders adopt
the agreement.
In the event the transaction closes, members of HCA's
senior management team have also agreed to reinvest
a portion of their HCA equity into the acquiring entity
or an affiliate thereof. Dr. Thomas Frist, Jr. and certain
related persons have reached agreements to vote their
shares in favor of the transaction.
Jack O. Bovender, Jr., HCA Chairman and CEO, said,
"After careful analysis, the special committee and the
board have endorsed this transaction as being in the
best interests of our shareholders. We are very pleased
to have an experienced group of investors who are committed
to maintaining our company's culture of a patients-first
approach to high quality, compassionate care. They are
also committed to the welfare of our colleagues across
the company who carry out that mission every day. These
are the principles on which HCA was founded."
Pending the receipt of stockholder approval and expiration
of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as well as satisfaction of
other customary closing conditions, the transaction
is expected to be completed in the fourth quarter of
2006. The transaction will be financed through a combination
of equity contributed by the private equity consortium,
Dr. Thomas Frist, Jr., and members of management, and
debt financing that has been committed by Bank of America,
Citigroup Global Markets, JPMorgan, and Merrill Lynch
Capital Corporation, subject to customary conditions.
There is no financing condition to the obligations
of the private equity consortium to consummate the transaction.
Under the merger agreement, HCA may solicit superior
proposals from third parties during the next 50 days.
In accordance with the agreement, the board of directors
of HCA, through its special committee and with the assistance
of its independent advisors, intends to actively solicit
superior proposals during this period. HCA advises that
there can be no assurance that the solicitation of superior
proposals will result in an alternative transaction.
HCA does not intend to disclose developments with respect
to the solicitation process unless and until its board
of directors has made a decision.
"This is a truly landmark deal, and we are pleased
to partner with the management team led by Jack Bovender,
Dr. Thomas Frist, Jr. and our fellow equity sponsors,"
said Stephen Pagliuca, a Managing Director at Bain Capital.
"HCA is the largest and most sophisticated operator
in the U.S. hospital industry, delivering high quality
and cost effective healthcare as well as a track record
of consistent growth. We look forward to putting our
extensive healthcare experience to work in order to
support management in growing this outstanding company."
Michael Michelson, a Member of KKR, stated, "HCA provides
world class patient care on a unique scale in this country
and is an indispensable part of the communities it serves.
We are delighted to be joining with HCA's talented management,
Dr. Thomas Frist, Jr., and our private equity partners
to continue to build the company's franchise of high
quality clinical care. KKR's experienced healthcare
team looks forward to providing strong support for HCA's
future growth, including continuing to invest substantial
capital in its facilities."
Dr. Thomas Frist, Jr. said of the pending transaction,
"This transaction will position the company to continue
its tradition of high-quality service provided with
genuine caring. In addition, the transaction will position
the company and its employees for sustained future success."
Credit Suisse Securities (USA) LLC and Morgan Stanley
& Co. Incorporated are acting as financial advisors
to the special committee. Credit Suisse and Morgan Stanley
have each delivered a fairness opinion to the special
committee. Shearman & Sterling LLP is acting as legal
advisor for the special committee and Bass Berry & Sims
PLC is acting as legal advisor for HCA.
Merrill Lynch & Co. acted as lead M&A advisor, and
Banc of America Securities LLC, Citigroup Global Markets,
and JPMorgan acted as M&A advisors, to the private equity
consortium. Simpson Thacher & Bartlett LLP is acting
as legal advisor to the private equity consortium.
The transaction does not require the consent of the
Company's unsecured noteholders. It is currently intended
that substantially all of the Company's 8.850% Medium
Term Notes due 2007, 7.000% Notes due 2007, 7.250% Notes
due 2008, 5.250% Notes due 2008 and 5.500% Notes due
2009 (or an equivalent amount of the Company's other
existing notes) will either be tendered for or repaid.
The transaction is not, however, conditioned upon any
such tender or repayment. The Company's remaining unsecured
notes are expected to remain outstanding and will not
be equally and ratably secured with the new debt raised
to finance the transaction.
About HCA
HCA Inc. is a holding company whose affiliates own
and operate hospitals and related health care entities.
The term "affiliates" includes direct and indirect subsidiaries
of HCA Inc. and partnerships and joint ventures in which
such subsidiaries are partners. At June 30, 2006, these
affiliates owned and operated 176 hospitals, 92 freestanding
surgery centers and facilities which provided extensive
outpatient and ancillary services. Affiliates of HCA
Inc. are also partners in joint ventures that own and
operate seven hospitals and seven freestanding surgery
centers which are accounted for using the equity method.
The Company's facilities are located in 21 states, England
and Switzerland.
About Bain Capital
Bain Capital is one of the world's leading private
investment firms, with over 20 years of experience in
management buyouts, and offices in Boston, New York,
London, Munich, Hong Kong, Shanghai and Tokyo. For more
information, visit www.baincapital.com.
About KKR
KKR is one of the world's oldest and most experienced
private equity firms specializing in management buyouts,
with offices in New York, Menlo Park, California, London,
Paris, Hong Kong and Tokyo. For more information, visit
www.kkr.com.
About Merrill Lynch Global Private Equity
Merrill Lynch Global Private Equity is the private
equity investment arm of Merrill Lynch & Co, Inc. For
more information visit www.ml.com.
Important Additional Information will be Filed
with the SEC
In connection with the proposed merger, HCA will file
a proxy statement with the Securities and Exchange Commission.
INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE
PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER
AND THE PARTIES THERETO. Investors and security holders
may obtain a free copy of the proxy statement (when
available) and other documents filed by HCA at the Securities
and Exchange Commission's Web site at http://www.sec.gov.
The proxy statement and such other documents may also
be obtained for free from HCA by directing such request
to HCA Inc., Office of Investor Relations, One Park
Plaza, Nashville, Tennessee 37203, telephone: (615)
344-2068.
HCA and its directors, executive officers and other
members of its management and employees may be deemed
to be participants in the solicitation of proxies from
its stockholders in connection with the proposed merger.
Information concerning the interests of HCA's participants
in the solicitation, which may be different than those
of HCA stockholders generally, is set forth in HCA's
proxy statements and Annual Reports on Form 10-K, previously
filed with the Securities and Exchange Commission, and
in the proxy statement relating to the merger when it
becomes available.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements
based on current HCA management expectations. Those
forward-looking statements include all statements other
than those made solely with respect to historical fact.
Numerous risks, uncertainties and other factors may
cause actual results to differ materially from those
expressed in any forward-looking statements. These factors
include, but are not limited to, (1) the occurrence
of any event, change or other circumstances that could
give rise to the termination of the merger agreement;
(2) the outcome of any legal proceedings that may be
instituted against HCA and others following announcement
of the merger agreement; (3) the inability to complete
the merger due to the failure to obtain stockholder
approval or the failure to satisfy other conditions
to completion of the merger, including the receipt of
stockholder approval and expiration of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976; (4) the failure to obtain the necessary debt
financing arrangements set forth in commitment letters
received in connection with the merger; (5) risks that
the proposed transaction disrupts current plans and
operations and the potential difficulties in employee
retention as a result of the merger; (6) the ability
to recognize the benefits of the merger; (7) the amount
of the costs, fees, expenses and charges related to
the merger and the actual terms of certain financings
that will be obtained for the merger; and (8) the impact
of the substantial indebtedness incurred to finance
the consummation of the merger. Many of the factors
that will determine the outcome of the subject matter
of this press release are beyond HCA's ability to control
or predict. HCA undertakes no obligation to revise or
update any forward-looking statements, or to make any
other forward-looking statements, whether as a result
of new information, future events or otherwise.
Press Contact:
Investor Contact
Mark Kimbrough
615-344-2688
Media Contact
Jeff Prescott
615-344-5708
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