Apria to Go Private in $1.6 Billion Deal with Blackstone
LAKE FOREST, Calif.--Apria Healthcare Group, one of the nation's
largest HME providers, said Thursday it would be acquired by an
affiliate of private equity company The Blackstone Group in a
merger transaction valued at $1.6 billion.
For each share of common stock they hold, Apria shareholders
will receive $21 in cash, a premium of 33 percent over the $15.89
share price on Wednesday and 29 percent over the stock's average
closing price for the previous 30 trading days.
The transaction will be financed through a combination of equity
contributed by Blackstone and debt financing from affiliates of
Bank of America, Wachovia and Barclays Capital. The deal is
expected to close in the second half of 2008, although under its
terms, Apria can look for better offers until July 24. If Apria's
board accepts a superior proposal, the company would be obligated
to pay a break-up fee.
In conjunction, Apria opened a $280 million line of credit with
affiliates of Bank of America, Wachovia and Barclays Capital.
Proceeds will be used to fund potential repurchases of Apria's
senior notes and to pay related tax liabilities.
When the deal is completed, Apria--which operates approximately
550 respiratory and infusion therapy locations in all 50
states--will become a private company wholly owned by Blackstone
and its affiliates. Apria's corporate headquarters will remain in
Lake Forest, Calif.; its infusion division headquarters will remain
On news of the announcement, Apria's shares jumped to $20.06 in
Thursday afternoon trading on the New York Stock Exchange.
Commenting on the deal, business analysts noted the company's
long-battered stock and pressure from shareholders concerned about
continuing lower Medicare reimbursements, particularly in light of
the current Washington back-and-forth on oxygen cuts and
Marking a strategic move away from reliance on Medicare and
Medicaid, Apria acquired Coram, a national home infusion and
specialty pharmaceutical services provider, for $350 million in a
cash deal that closed in December. (See target="_blank">HomeCare Monday, Oct. 22, 2007.)
This is not the first time Apria has looked at a sale. In June
of 2005, the company retained investment banking firm Morgan
Stanley to consider potential offers. Later that year, however,
Apria's board announced that none of the proposals it received
represented its “value and prospects for future
appreciation” and took the giant provider off the block.
In a statement issued Thursday, Apria CEO Lawrence M. Higby said
the Blackstone deal was in the best interest of shareholders.
"We are excited about teaming up with Blackstone to continue
pursuing our goals of growth while continually improving operating
efficiencies and enhancing our service for all of the patients and
customers we serve,” Higby said. “We are delighted that
a company with the resources and reputation of Blackstone
recognizes the value inherent in the service-first approach that
our associates across the country deliver every day.”
Apria's board of directors has approved the agreement with
Blackstone and will recommend its adoption to shareholders. The
company will solicit shareholder approval at a special meeting that
could be held as early as September.
Apria and its operating divisions serve over two million
patients. In addition to those covered by government insurers,
Apria has over 2,000 preferred provider contracts with managed care
Speculating on a similar buyout of Apria rival Lincare, Wall
Street analysts said it is unlikely. Following news of the Apria
deal, on Thursday, Lincare's shares rose to $28.69 on the Nasdaq
but had settled to $27.21 by Friday's market close. Headquartered
in Clearwater, Fla., Lincare serves 700,000 customers in 47 states
with more than 1,020 branches.