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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Hospital And Nursing Home Firms Agree To $1.9 Billion Merger Deal Vencor Inc. To Buy Tacomabased Hillhaven

Associated Press

Vencor Inc., a large operator of hospitals for the chronically ill, is buying Hillhaven Corp., the nation’s second-biggest nursing home company, for $1.9 billion in the health care industry’s latest mega-deal.

The purchase would combine companies offering complementary services, making the new entity better able to compete for contracts with costconscious managed care groups like health maintenance organizations, analysts said.

It follows by one month Hillhaven’s rejection of a $1.8 billion buyout from nursing home competitor Horizon Healthcare Corp., of Albuquerque, N.M.

Horizon went on to buy Continental Medical Systems Inc., of Mechanicsburg, Pa., a medical rehabilitation company, for $502 million. Hillhaven is in the process of buying Nationwide Care Inc., another nursing home company.

The past two months have also seen two big linkups of companies that provide medical care for the seriously ill at home. Abbey Healthcare Group Inc., and Homedco Group Inc. announced their decision to merge in March. Last week, Coram Healthcare Corp., announced it would buy Lincare Holdings Inc. for $1.1 billion in stock.

Monday’s deal calls for Hillhaven stockholders to receive $32.25 worth of Vencor stock for each of their shares - about 31 percent over Hillhaven’s market value.

In addition, Vencor, a much smaller company, would take on Hillhaven’s roughly $500 million in debt.

The transaction is expected to be completed in the third quarter, pending approval by government regulators and shareholders.

Vencor, based in Louisville, Ky., operates 35 acute care hospitals around the country, mostly catering to gravely ill patients who have suffered major head injuries or other trauma, strokes, or serious diseases of the heart and lung. It also provides respiratory therapy services to 750 nursing homes.

Tacoma-based Hillhaven runs 363 nursing homes and subacute care centers, which are medical facilities catering to patients who are not sick enough to be in a hospital, but unable to live at home.

Executives said the two companies would mesh well, noting that 65 percent of Hillhaven’s nursing homes are located in states where Vencor operates hospitals.