A Medical Device Daily

Odyssey HealthCare (Dallas) reported that it has agreed to acquire VistaCare (Scottsdale, Arizona) for $8.60 a share, or about $147.1 million.

Both companies are hospice care providers. Completion of the transaction, which is expected in 1Q08, is subject to standard closing conditions.

The transaction has been structured as a two-step deal: a cash tender offer for all outstanding shares of VistaCare common stock, followed by a cash merger in which Odyssey would acquire any remaining outstanding shares of VistaCare common stock.

Odyssey said it will fund the transaction with $30 million of its own cash and a commitment of $150 million from GE Capital, consisting of a five-year $30 million revolving credit facility and a six-year $120 million term loan. After the transaction is completed, Odyssey will have about $20 million to $25 million in cash on its balance sheet, about $30 million available on its GE Capital commitment.

For fiscal year ended Sept. 30, 2007, VistaCare reported annual revenues of about $241 million.

Odyssey said the purchase solidifies its position in hospice care, with about 110 owned or operated locations in 31 states and average daily census of more than 12,000.

Robert Lefton, president/CEO of Odyssey, termed the purchase “a turning point for Odyssey as we expect to exceed $617 million in net revenues, improve our platform for growth in our core hospice business and add valuable and talented professionals to our company. Our combination with VistaCare will substantially extend our industry leadership and our geographical reach in the markets we serve ... .”

The company expects the acquisition to be accretive to its 2009 earnings after absorbing the costs of integrating the two companies’ operations in 2008. It anticipates that the acquisition will be neutral with respect to its 2008 earnings.

In other deal news: Hillenbrand Industries (Batesville, Indiana) reported the filing of the first amendment to the Batesville Holdings statement with the Securities and Exchange Commission for the previously reported separation of Hillenbrand’s two operating companies: Hill-Rom, the company’s medical technology business, and Batesville Casket (Medical Device Daily, May 11, 2007).

The separation is now expected to be completed March 31, at the end of the company’s FY2Q.

Hillenbrand said it concluded that Statement of Financial Accounting Standards No. 5, Accounting for Contingencies, with which the company currently complies for antitrust litigation pending against Hillenbrand, its Batesville Casket subsidiary and three unrelated national funeral home businesses, is an acceptable post-separation accounting treatment for a judgment-sharing agreement that will apportion responsibility between Hillenbrand’s separated companies for any potential damages.

Peter Soderberg, president of Hillenbrand and Hill-Rom, said that the separation “is the best way to unlock value and allow each company to focus on accelerating growth in their respective industries.”

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