Universal Health Services Inc. is close to a deal to acquire mental-health hospital operator Psychiatric Solutions Inc. that could be worth almost $2 billion, according to media reports Sunday.
Universal Health Services, one of the nation's largest hospital operators, is offering to buy Psychiatric Solutions for $33 to $34 per share, The Wall Street Journal said on its Website Sunday, citing unnamed people familiar with the matter. Such an offer would value the Franklin, Tenn., company between $1.89 billion and $1.94 billion.
Psychiatric Solutions confirmed in March that it had been approached about a sale. It did not disclose the suitor, but reports at the time said private equity firm Bain Capital was in negotiations to buy the company. Psychiatric Solutions' shares have jumped more than 36 percent since news of a potential deal surfaced, closing Friday at $32.63 after reaching an annual high of $33.25.
In an interview Sunday, Avondale Partners analyst Kemp Dolliver said Wall Street always saw Universal Health Services as a logical potential bidder. He said the King of Prussia, Pa., company confirmed several weeks ago that it might make its own offer for Psychiatric Solutions.
"The businesses would fit," Dolliver said. He added that Universal Health Services once generated most of its profit from acute care hospitals and not mental health hospitals, but that has changed quickly in the last few years.
"If they were to buy (Psychiatric Solutions), they'd become much more of a behavioral health care company than an acute care company," he said. "A clear majority of earnings would come from the behavioral health business."
Psychiatric Solutions runs hospitals in 32 states, Puerto Rico and the U.S. Virgin Islands. The company reported a 12 percent rise in 2009 profit to $117.6 million, with revenue growing 6 percent to $1.81 billion.
At the end of March, Universal Health owned or leased 82 behavioral health hospitals and 21 acute care hospitals. It reported profit attributable to UHS of $260.4 million on revenue of $5.2 billion for fiscal 2009.