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Hospital M&A activity jumped 33 percent in 2010

Hospital mergers and acquisitions saw a marked increase in activity in 2010, according to Deal Search Online, a database maintained by Irving Levin Associates, Inc. The database recently released the five largest hospital transactions reported in 2010.

According to Deal Search Online, M&A activity in 2010 featured the following highlights:

  • 48 hospital mergers and acquisitions were announced during just the second half of 2010, representing 62 percent of the 77 deals announced all year.
  • There were nine first-quarter deals, 20 second-quarter deals, 24 third-quarter deals and 24 fourth-quarter deals.
  • The 77 deals marked a 33 percent increase from the 52 deals reported in 2009. The deals represented $12.6 billion committed to hospital M&A activity in 2010, an 86 percent increase from the $1.8 billion committed to the sector in 2009.
  • Not since 2001, when 82 deals were reported, have there been this many hospital transactions in a single year.
  • Last year accounted for the second most dollars committed in the hospital sector in 10 years, behind only 2006's $35.5 billion.

Five Largest Hospital Deals of 2010:

  Five Largest Hospital Deals of 2010

Acquirer

Target

Value

Quarter

Community Health Systems

Tenet Healthcare

$7.3 billion

Q4:10

Vanguard Health Systems

Detroit Medical Center

$1.3 billion

Q2:10

Cerberus Capital Management

Caritas Christi Health Care

$830 million

Q2:10

Prospect Medical Holdings

Management buyout

$363 million

Q3:10

University Community Health

Adventist Health Systems

$355 million

Q3:10

According to Irving Levin Associates, Community Health Systems' proposed takeover of Tenet Healthcare for $7.3 billion signals a willingness of companies to use the large amounts of capital they've been sitting on since the recent and ongoing financial crisis. This indicates a recovery in M&A activity since the generational low in March 2009.

More than $83.1 billion was committed to fund the 589 hospital takeovers that were announced during the 10-year period ended Dec. 31, 2010, according to Deal Search Online. Activity was sluggish due to the recession earlier in the decade, but the market rebounded and grew to the level of $35.5 billion in 2006.

If the second half of 2010 is any indication, the hospital sector is heading for an active 2011, Irving Levin Associates said.
 
Hospital Mergers and Acquisitions, 2001 to 2010:

 Hospital Mergers and Acquisitions, 2001 to 2010

Year

Number of Deals

Dollars Committed

2001

82

$3,108,119,000

2002

56

$3,403,681,000

2003

37

$2,341,550,000

2004

59

$9,706,390,000

2005

50

$2,905,729,000

2006

55

$35,533,500,000

2007

61

$9,257,130,000

2008

60

$2,580,600,000

2009

52

$1,678,800,000

2010

77

$12,611,395,000

Total

589

$83,126,894,000

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