Area hospital owner to buy related firm

DALLAS - Tenet Healthcare Corp. plans to buy fellow hospital operator Vanguard Health Systems Inc. for about $1.8 billion, in a deal that will expand its reach into new markets as millions of patients start to gain insurance coverage through the health care overhaul.

Tenet owns Hahnemann University Hospital and St. Christopher's Hospital for Children in Philadelphia.

Tenet said Monday that it will pay $21 per share, a 70 percent premium to Vanguard Health's Friday closing price of $12.37. The companies said the transaction also includes $2.5 billion in debt, and they value the entire deal at $4.3 billion.

Shares of Vanguard Health soared 67.4 percent, or $8.34, to $20.71 Monday after the companies announced the deal. The company's stock price had advanced only about 1 percent as of last Friday since closing 2012 at $12.25.

Shares of Dallas-based Tenet rose 4.5 percent, or $1.87, to $43.72. Meanwhile, the Standard & Poor's 500 index fell 1.2 percent.

The federal health care overhaul is expected to help hospitals by reducing the number of uninsured patients they treat.

Tenet said Nashville-based Vanguard will help it expand into several new markets and increase the benefit it expects to realize from the overhaul. Vanguard runs 28 acute care and specialty hospitals in Texas, Massachusetts and major cities like Chicago, Phoenix, and Detroit. Its specialty locations include heart, children's and rehabilitation hospitals.

In another Philadelphia connection, Vanguard and Children's Hospital of Philadelphia are in a partnership to establish a freestanding children's hospital and pediatric health-care system in San Antonio.

The boards of both companies have unanimously approved the deal, which is expected to close by the end of this year. After that, Tenet will own 79 hospitals and 157 outpatient facilities. It currently has 49 hospitals and 126 outpatient facilities.