LifePoint Health stockholders have greenlighted the proposed merger with Tennessee-based RCCH HealthCare Partners, which is owned by Apollo Global Management. When the deal closes, shareholders will net $65 a share in cash for each share of common stock they own, the system said.
The merger is expected to be completed during the fourth quarter of calendar year 2018, subject to remaining closing conditions.
WHY IT MATTERS
While the merger itself got the stamp of approval from a significant majority of LifePoint stockholders, they also gave a decisive thumbs down to a "golden parachute" package that would have compensated LifePoint's top four executives to the tune of $120 million total.
LifePoint's Chairman and CEO Bill Carpenter III would have received $69.7 million, President and COO David Dill more than $25.3 million, Executive Vice President and CFO Michael Coggin $13.4 million and Executive Vice President and Chief Administrative Officer John Bumpus would have received $11.5 million, according to a filing with the Securities and Exchange Commission.
However, the vote on the parachute package is advisory and is nonbinding provided the merger is finalized. "The compensation that is payable pursuant to LifePoint's existing compensation plans and programs, as contemplated by the merger agreement, will be paid in accordance with its terms, as described in the proxy statement that was filed in September," said a LifePoint Health spokesperson.
WHAT IS THE TREND
These benefits are known as a "double-trigger" in that there needs to be a "change in control" under the severance plan, which includes the finalizing of a merger, and as long as the executive is terminated without "cause" within 18 months after a change in control and/or the executives were not offered a position by LifePoint, its affiliates or the new entity, according to an SEC filing outlining the merger conditions of the "golden parachute" package.
While merger and acquisition activity has been at a feverish clip in recent years, it showed signs of slowing in third quarter FY2018 with 18 recorded transactions, a 38 percent drop over Q3 2017. However, total transaction revenue through the third quarter of 2018 was $10.7 billion, according to a recent KaufmanHall report. The LifePoint/RCCH merger was a major driver of that revenue, valued at $7.2 billion. If the deal closes, the new system will include 84 non-urban hospitals across 30 states along with regional health systems, physician practices, and ambulatory care and post-acute sites.
ON THE RECORD
"The combined company intends to maintain strategic partnerships with well-known leaders in patient safety and clinical quality to bring leading practices in quality and patient safety to each of its communities," the systems said.
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