- The buyer paid up to keep the deal. HealthSpan Partners, an affiliate of the Bon Secours Mercy Health system, raised its offer for Surgery Partners to $25 a share, an enterprise value of about $6 billion, from the $23.50-a-share cash deal announced Oct. 26, according to a joint statement Monday cited by Bloomberg.
- A higher bid was turned down. Surgery Partners rejected an unsolicited offer received this month of $28 a share in cash for all shares, citing the risk the deal would not close and added regulatory complexity.
- Shareholders get protection against delays. The revised agreement includes monthly cash payments if shareholders approve the deal but it does not close by March 1.
- The stock jumped. Surgery Partners rose 12% in premarket trading Monday, after gaining 50% this year through Friday’s close.
What Happened?
A committee of independent directors at the Bain Capital-backed surgical chain concluded that the $28 offer would take longer or might not close, would increase regulatory risk and would not adequately protect shareholders against those risks. Instead, Surgery Partners secured a higher price from its existing partner. Bain affiliates, which own about 39% of the company, will not receive any consideration, including the cash payments, and will instead roll over their shares into a stake in the combined entity.
Why It Matters?
The decision shows a board prioritizing deal certainty over headline price. By our calculation, HealthSpan’s bump adds $1.50 a share, or about 6.4%, to the original offer, while the rejected bid was $3 a share, or 12%, above the new price. The monthly cash payments shift some of the cost of regulatory delays onto the buyer, and Bain’s rollover means public shareholders are the ones being cashed out at $25.
What’s Next?
Next comes the shareholder vote on the revised agreement and the regulatory process, with March 1 the key date: if holders approve but the deal has not closed by then, the monthly cash payments begin. Investors will also watch whether the $28 bidder returns with terms that address the board’s concerns about closing and regulatory risk.
Affected Tickers and Coins: SGRY
Source: Bloomberg
