UPDATE 1-UHS to buy Psychiatric Solutions in $3.1 bln deal

* Offers $33.75/shr for Psychiatric Solutions

* UHS to pay $2 bln cash and assume $1.1 billion of debt

* Sees deal to be significantly accretive to UHS’s EPS

May 17 (BestGrowthStock) – Hospital operator Universal Health
Services Inc (UHS.N: ) said it will buy mental health facilities
operator Psychiatric Solutions Inc (PSYS.O: ) for about $2 billion
in cash plus the assumption of about $1.1 billion of debt.

The $33.75 per share offer, represents a 3.4 percent premium
to Psychiatric Solutions’ Friday closing price of $32.63.
Psychiatric Solutions had a market capitalization of about $1.87
billion at Friday’s close.

Excluding one-time costs related to the acquisition, the
transaction is expected to “significantly” add to UHS’s earnings
per share, the company said in a statement.

“The combination with PSI will further strengthen our
behavioral health division, which has already grown
substantially through capacity expansion and strategic
acquisitions,” Chief Executive Alan Miller said.

The transaction has fully committed debt financing to be
provided by JPMorgan Chase Bank and Deutsche Bank AG, UHS said.

Private equity firm Bain Capital, which was in an auction
for Psychiatric Solutions until the end on Sunday, did not put
in a topping bid, a source told Reuters earlier in the day.

In March, the Wall Street Journal previously reported that
private equity firm Bain Capital was in talks to buy the
company, with Psychiatric Solutions seeking a 25 percent
premium. [ID:nN10164117]

UHS expects to complete the transaction in the fourth
quarter of 2010, the company said.

Shares of Psychiatric Solutions, which operates mental
health care facilities in 32 states, closed at $32.63 Friday on

Shares of UHS closed at $39.04 Friday on the New York Stock

Stock Research

(Reporting by Shrutika Verma in Bangalore; Editing by Jon

UPDATE 1-UHS to buy Psychiatric Solutions in $3.1 bln deal