Austin, TX (November 30, 2009) - After an intense effort made over the past thirty days to complete its due diligence review, the Seton Family of Hospitals ("Seton") rejected today an offer made by Scott & White Healthcare ("S&W") to sell to Seton the assets of King's Daughters Hospital ("KDH") which had been acquired by S&W through a merger agreement consummated earlier this year.
The offer to sell the assets of KDH to Seton resulted from an investigation initiated by the Federal Trade Commission ("FTC") and the Texas Attorney General concerning the S&W / KDH merger. According to S&W, the offer to sell the assets of KDH to Seton constituted part of the resolution reached by the FTC and the Texas Attorney General to conclude the investigation.
"Since receiving Scott & White's offer, Seton expended a tremendous amount of time and resources to complete an analysis of the facility and its health care offerings, while also surveying the market to assess consumer interest in Seton's presence in the market," said Charles Barnett, President and CEO of the Seton Family of Hospitals. "In this effort, Seton involved over 40 executives and several subject matter experts, two national law firms and an international accounting firm. Many members of the team made visits to Scott & White and King's Daughters Hospital over the past several weeks."
"The acquisition of King's Daughters was untenable because of Scott & White's restrictions in their offer, as well as the deteriorating condition of the hospital and its medical offerings since earlier this year, after being acquired by Scott & White," Barnett said. "However, due to significant encouragement by physicians not connected to Scott & White and strong consumer support, the Seton Family of Hospitals will continue to look for other opportunities in the area to provide hospital and medical services."
The terms and conditions of the offer to sell the KDH assets to Seton were contained in an Asset Purchase Agreement provided by S&W to Seton on October 30, 2009. As stated in the S&W offer / transmittal letter provided to Seton, the materials terms and conditions of the Asset Purchase Agreement were not negotiable. Moreover, S&W indicated that the offer would expire on Monday, November 30, 2009, and that, if accepted, Seton would only have 30 days to close the transaction.
Seton's analysis concluded that the offer from Scott & White was not a viable offer due to a significant reduction in the value of the KDH assets from an operational perspective which occurred under S&W's management and control since April 1, 2009. Also, certain provisions of the proposed Asset Purchase Agreement raised significant clinical and economic sustainability issues which Seton sought to address through changes to the Asset Purchase Agreement, but which were rejected by S&W.
With over 107 years of experience in serving patients in the Central Texas Region, Seton believes that competition and free choice of patients coupled with its Mission, Values, traditions, and commitment to clinical excellence would be beneficial to both patients and other non-Scott & White healthcare providers. The acquisition of the KDH assets also was seen as an opportunity to create a Catholic hospital presence in this part of Central Texas and leverage the capabilities and potential synergies associated with Seton and Providence Health in Waco (both members of Ascension Health, the largest not for profit, faith based healthcare organization in the United States.)
Seton is proud to have four hospitals – the only hospitals in Central Texas - that have earned the