Acadia paying $660M for British company

Deal to grow top line by 40%, add to EPS

Joey Jacobs is taking Acadia Healthcare into Europe with a deal to pay a private-equity firm $660 million in cash for Partnerships in Care, the No. 2 independent provider of inpatient behavioral health services in the United Kingdom.

PiC runs 23 facilities that hold more than 1,200 beds and last year posted EBITDA of about $75 million on revenues of about $285 million. Bank of America Merrill Lynch has agreed to finance the planned deal, which will grow Franklin-based Acadia by about 40 percent, taking its revenue run rate well past $1 billion annually. Seller Cinven has owned PiC since May 2005.

"We believe our combination with PiC will be a great transaction for both Acadia and PiC," said Jacobs, Acadia's chairman and CEO. "As discussed in more detail below, we believe the inpatient behavioral care market in the UK represents a very meaningful and accretive growth opportunity. As a high quality provider and well-established market leader, PiC will provide Acadia with an outstanding market entrée. We expect to support PiC’s strong management team in taking advantage of additional growth opportunities in the UK through both our access to capital and the expertise evident in the successful long-term growth record of Acadia’s management team."

Outside of the government-run National Health Service, the U.K. behavioral health sector is worth about $2 billion and has grown at an annual rate of more than 9 percent over the past decade. PiC has about 16 percent of that $2 billion market and has profit margins about 5 percent higher than Acadia. The acquisition is expected to close by the end of this month and will add between 17 cents and 20 cents to Acadia's 2014 earnings per share, which were 86 cents last year.

Shares of Acadia (Ticker: ACHC) closed at $42.04 on Monday and are down about 11 percent so far this year.

"We are confident that this transaction provides PiC the exact opportunity we need to expand and diversify our portfolio further to offer patients genuine choice across the spectrum of behavioral healthcare," said PiC CEO Joy Chamberlain. "We have seen that Acadia shares our culture of compassionate care and believes, as we do, that it is the foundation of our past and future success."

Jacobs said he expects to follow Acadia's U.S. growth blueprint of combining organic growth with acquisitions in the U.K. Striking a few more deals, he noted, also will help Acadia lower its income tax rate.