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Wednesday, July 26, 2006

Competing Buyout Offer for HCA?

On Monday we were questioning WHY shareholders would accept such a low price on this HCA (HCA) buyout. Now there are market reports saying that Blackstone, another private equity behemoth, may enter a bid for the company. Management was so eager to accept a low price and low multiple that this is of no surprise.

This only helps the valuation of HCA and all the other hospitals. HCA's founder-led group does have the right to match any competing bids and there is a $300 million break-up fee.

With this being the largest version of legal insider trading you can possibly imagine, what does this tell you about the value of the hospital group if the largest one out there is up for grabs at low multiples?

HCA is up almost 2% at $50.17 pre-market.

Other hospitals are as follows:

HCA Inc. (HCA)
Health Management Associates I (HMA)
Community Health Systems, Inc. (CYH)
Triad Hospitals Inc. (TRI)
Universal Health Services Inc. (UHS)
Tenet Healthcare Corp. (THC)
Lifepoint Hospitals Inc. (LPNT)
Magellan Health Services Inc. (MGLN)
AmSurg Corp. (AMSG)

Jon C. Ogg
July 26, 2006

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