HCA shareholders approve $21 billion buyout

updated 4:57 p.m. ET Nov. 16, 2006

NASHVILLE, Tenn. - HCA Inc. shareholders on Thursday overwhelmingly approved a $21.3 billion leveraged buyout — the second largest ever in the U.S. — to take the nation’s No. 1 for-profit hospital chain private.

Company officials announced in a meeting at its Nashville headquarters that 283.2 million shares, or 72.9 percent, were voted for the deal while 32 million, or 8.2 percent, were opposed. There are about 388 million shares outstanding, but only 82 percent of them were present for the vote, HCA officials said.

HCA needed approval from a majority of shareholders to seal the deal, which it expects to complete by the end of the year.

HCA Chairman and CEO Jack Bovender told The Associated Press that he felt vindicated by Thursday’s vote following lawsuits filed by shareholders who claimed they were not getting paid enough under the buyout deal.

“Obviously an overwhelming majority of the shareholders felt it was a fair price,” he said. A shareholder suit that challenged the buyout was settled earlier this month.

The deal calls for stockholders to receive $51 cash for each share of common stock, 18 percent above the stock’s closing price before the agreement was made public.

Shares of HCA rose 13 cents to $50.94 in trading on the New York Stock Exchange.

The deal also involves $16 billion in new debt to be borrowed for the buyout and the assumption of $11.7 billion in existing debt.

The company announced in July that its board approved the offer by current HCA management and Hercules Holding II LLC, a consortium of private investment funds including Bain Capital Partners LLC, Kohlberg Kravis Roberts & Co. and Merrill Lynch Global Private Equity.

The leveraged buyout is the largest, excluding debt, since the $25.1 billion offer for RJR Nabisco Inc. in 1988, according to Thomson Financial.

Nashville residents John and Jane Smith, who have owned HCA stock for about 18 years and now hold about a hundred shares, said they voted in favor of the merger by proxy and turned out for the shareholder meeting to see history being made.

“We thought it would be fun to come out and watch,” John Smith, 80, said after the meeting.

Smith said he thought the price was fair considering the current share price.

HCA operates 172 hospitals and 95 freestanding surgery centers and other facilities that provide outpatient services in 21 states, Britain and Switzerland.

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