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MedAssets to buy Broadlane for $850M

Two recognizable names in revenue cycle management are joining forces.

MedAssets, an Alpharetta, Ga.-based provider of supply chain management solutions, announced on Tuesday that it has agreed to acquire The Broadlane Group for roughly $850 million in cash. The deal, expected to be completed within three months, would combine two of the top four healthcare group purchasing organizations in the nation.

Broadlane is a Dallas-based provider of supply chain management, strategic sourcing of supplies and services, capital equipment lifecycle management, medical device or PPI cost management, centralized procurement, clinical and lean process consulting and clinical workforce optimization solutions.

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“We are bringing together some of the best contract pricing in the industry, with highly complementary technology and clinical consulting expertise from both companies," said John Bardis, MedAssets’ chairman, president and CEO. "Our core strategy is to enable broader clinical and operating effectiveness throughout our nation's health system, and this transaction will further enhance our ability to help hospitals and other healthcare providers drive their operating and supply costs lower, while improving patient care.”

“This transaction offers an exceptional opportunity to bring together two very strong enterprises and deliver end-to-end cost management capabilities,” added Patrick Ryan, Broadlane’s chairman and CEO, who is expected to join MedAssets’ board of directors and become the company’s president of the spend management segment upon completion of the deal. “As a combined entity, we offer a strategic opportunity for our clients to drive operating expenses down while improving quality of care. The collective strengths of The Broadlane Group and MedAssets will provide expanded supply chain capabilities, and further enhance the financial improvement opportunities, both near and long-term, for our healthcare provider clients.”

Combined, the two companies reported net revenue of almost $509 million and non-GAAP combined adjusted EBITDA of almost $162 million for the year ended Dec. 31, 2009. Broadlane’s client base stretches out to more than 1,100 acute care hospitals and 50,000 non-acute care providers, while MedAssets serves more than 3,300 hospitals and 40,000 non-acute care providers.

“The collective strengths and business models of our two companies will also enhance MedAssets' financial profile, with highly visible, recurring revenue as well as cash flow and profit expansion opportunities,” said Bardis.

MedAssets is buying Broadlane from TowerBrook Capital Partners, a private equity firm that acquired the company in August 2008. Since then, TowerBrook had broadened the company’s management team, expanded its product lines and acquired three complementary healthcare companies.

“We have worked very closely with the Broadlane management team over the course of our investment to re-position the business in order to fulfill the company's tremendous growth potential and the needs of healthcare providers and suppliers,” said Ian Sacks, TowerBrook’s managing director. “We believe the combination with MedAssets will enable Broadlane to continue to bring value to the broader marketplace."

The deal – in the form of a $725 million cash payment at closing and a $125 million cash payment in January 2012, is expected to add $20 million to MedAssets’ coffers in the coming year. MedAssets has obtained financing commitments from J.P. Morgan and Barclays Capital to complete the transaction.