Updated 12:45 p.m. with comments from Ardent
Ardent Health Services has made a $69.8 million bid for bankrupt northern Ohio hospital system Forum Health.
According to bankruptcy court documents, an Ardent subsidiary will acquire substantially all Forum’s assets — including the three campuses of Northside Medical Center, Trumbull Memorial Hospital and Hillside Rehabilitation Hospital — if approved by the court.
Forum selected the Nashville hospital company after a 10-month process that resulted in bids from eight parties. It determined Ardent was "the bidder with the best bid, based on price, terms, and likelihood of closing, and devoted the necessary resources to reaching a binding agreement," according to the health system's sale motion filed in the U.S. Bankruptcy Court in Ohio today.
Including assumed liabilities, the total deal value is greater than $94 million.
In addition, Ardent has pledged to keep all the hospitals open, hire every current employee and invest an additional $50 million to $70 million on renovations, equipment and other upgrades over the next five years. It will also purchase Forum’s physician group, two diagnostic and imaging centers and five laboratory sites.
In a joint statement announcing the deal, Ardent CEO David Vandewater said:
"We believe in Forum Health and its future as a vibrant contributor to the region, as a provider of quality health care and as an important employer. We appreciate the support we have received throughout the community, the state and within Forum. We hope the court will approve the sale and that we’ll have the opportunity to join this community and be a part of its next success story."
To help its case, Ardent has already negotiated multi-year agreements with the health system's labor groups and garnered the support of "key doctor and physician groups." The motion also states that the debtors believe the Ohio communities of Youngstown and Warren will support the sale and the state attorney general will not oppose it.
Of course, other parties may bid on Forum's assets before Ardent gets its prize. Should bidders offer at least $3.5 million more than Ardent's price — the deal’s $3 million break up fee plus $500,000 — they may participate in an auction proposed for July 15. Forum wants the sale hearing to take place on July 20.
Forum, which has an estimated book value of $76 million, filed for Chapter 11 bankruptcy in March of 2009. Though the parties involved initially wanted to improve operations without pursuing a sale, "their board ultimately embraced the idea of an M&A option" and collective bargaining units "gave way to acceptance of the exploration and pursuit of a sale."
If approved, the acquisition would open up a third market for Ardent. Currently the company operates eight hospitals in New Mexico and Oklahoma with about 1,400 licensed beds.
Spokesman Kevin Gwin said Ardent was attracted to the market because it's an area of the country that's beginning an economic turnaround. Citing the addition of a new steel mill and General Motors' plans for expanded vehicle production in the region, he said "the momentum is heading in the right direction."
"You’ve got a part of the country where we see a lot of good news ahead," Gwin said. "You have an in-tact system that has good physician support and has a good market share and we're going to build on that."