Health Care Winners: Universal Health

Shares of Universal Health Services rise sharply Monday as the company wins a bidding war to acquire Psychiatric Solutions.
Author:
Publish date:

NEW YORK (

TheStreet

) -- Shares of

Universal Health Services

(UHS) - Get Report

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.

Cramer's Picks

Cramer on Pfizer and Human Genome

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.

RELATED STORIES:

>>Vital Signs on Five Hospital Stocks

Follow TheStreet.com on

Twitter

and become a fan on

Facebook.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.