A Medical Device Daily

Caritas Christi Health Care (Boston) said it has agreed to be acquired by Steward Healthcare System (Euless, Texas), a newly formed affiliate of private investment firm Cerberus Capital Management (New York).

The deal is subject to customary closing conditions, including approvals from the Massachusetts Attorney General and the Massachusetts Department of Public Health, as well as the approval of the Archbishop of Boston, the companies noted.

Caritas stands to get roughly $830 million of capital support, including the assumption of all pension obligations, the repayment of all outstanding debt, and a significant capital investment to fund operations. The deal also brings a commitment to about $400 million of capital projects, the companies said.

President/CEO Ralph de la Torre will continue to lead Caritas Christi, along with its current management team, and the company's headquarters will remain in Boston.

Six Caritas Christi hospitals will retain their Catholic identities, and their existing policies on charitable and pastoral care, community benefits, and approach to labor relations from a social justice perspective, the organization noted.

The system also said that the acquisition and the conversion of Caritas Christi to a taxable entity, upon approval, are expected to generate significant state and local tax revenues. The process for obtaining the necessary approvals will begin immediately, the company said.

In other dealmaking activity, CryoLife (Kennesaw, Georgia) said it has withdrawn its $2 a share proposal to acquire Medafor (Minneapolis).

CryoLife said it previously notified Medafor of its intention to withdraw its offer. Medafor recently reported sending a letter to CryoLife threatening litigation over a distribution agreement breach (Medical Device Daily, March 22, 2010).

Prior to that letter, CryoLife reported sending a letter to Medafor's board urging the company to negotiate an acquisition deal (MDD, Feb. 9, 2010).

That was after CryoLife bought about 740,000 additional shares of Medafor's common stock for $2 a share, giving the company roughly 11% ownership of Medafor and making it the company's largest shareholder. CryoLife then proposed acquiring the rest of Medafor's outstanding common stock for $2 a share in a combination of cash and CryoLife stock (MDD, Feb. 4, 2010).