Health Care Winners: Universal Health

NEW YORK (TheStreet) -- Shares of Universal Health Services(UHS) were among the biggest gainers Monday after the company won a bidding war for behavioral health-services provider Psychiatric Solutions(PSYS).

Universal Health had reportedly locked horns with private equity firm Bain Capital over control of Psychiatric Solutions. But, this weekend, Universal offered about $2 billion for the company, or $33.75 per share, 25 cents more than Bain's competing bid.

Universal Health said Monday that it will pay $2 billion in cash and assume $1.1 billion in Psychiatric Solutions debt.

In midday trading, shares of Universal were trading higher by 6.3% at $41.49 after earlier touching a 52-week high of $43.47.

The stock, which has climbed 25% since falling to a year low of $28 in January, first spiked last Friday as rumors of the bidding war for Psychiatric Solutions surfaced.

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Shares of Psychiatric Solutions, meanwhile, haven't benefited from the deal news. Some Wall Street analysts had been expecting a higher price tag for the company. The deal represents a 3.4% premium to Psychiatric Solutions' closing stock price Friday. The company's shares have also enjoyed a heady run up this year, gaining more than one-third from a late February low of $21.

Amid the M&A rumors, the stock touched a 52-week high of $33.25 Friday.

Universal Health said that the companies' combined revenue and EBITDA in 2009 total more than $7 billion and $1.1 billion, respectively.

The company also estimated that revenue from the behavioral health care business represented about 45% of the combined 2009 revenue and approximately 54% of combined 2009 EBITDA, Universal said in a statement announcing the acquisition.

-Reported by Eric Rosenbaum in New York.

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