Psychiatric Solutions Agrees to $3.1B Bid

KING OF PRUSSIA, Pa. (TheStreet) -- Universal Health Services(UHS) will acquire Psychiatric Solutions(PSYS) for $33.75 a share in cash, or about $2 billion.

Universal Health, the hospital operator, also will assume about $1 billion of Psychiatric Solutions' debt, bringing the total value of the deal to about $3.1 billion.

Shares of Psychiatric Solutions closed Friday at $32.63.

The merged company is expected to generate about $35 to $45 million in annual cost synergies within three years following the close of the deal in the fourth quarter. Excluding one-time costs related to the acquisition, Universal Health said Monday the transaction of Psychiatric Solutions, which operates mental-health facilities, is expected to be significantly accretive to its per-share earnings.

"This transformative transaction is very compelling for shareholders, patients and employees of both companies, and we are excited to add PSI's assets to our portfolio," said Alan Miller, Chairman and CEO of Universal Health, in a statement Monday. "The combination with PSI will further strengthen our behavioral health division, which has already grown substantially through capacity expansion and strategic acquisitions."

In March, it was reported that Psychiatric Solutions was in talks to be acquired by private-equity firm Bain Capital.

But Bain, which was in an auction for Psychiatric Solutions until the end on Sunday, didn't put in a topping bid, a source told Reuters.

-- Reported by Joseph Woelfel in New York.

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