A Medical Device Daily
eResearchTechnology (eRT, Philadelphia) reported it has agreed to acquire the centralized ECG business of Covance (Princeton, New Jersey). In addition, Covance and eRT have entered into an exclusive 10-year marketing agreement to supply eRT's centralized cardiac safety services to Covance clients. Covance will exclusively use eRT as its provider of centralized cardiac safety services for a 10-year period.
The companies disclosed that eRT will make a cash payment of $35.2 million and may pay about $14 million in additional compensation based upon eRT's potential realization of revenue from the backlog transferred and from new contracts secured through Covance's marketing activities.
"The scale, expertise, and ancillary technology benefits that will be derived from the acquisition will allow us to provide better and more cost-effective services to our valued clients and to the drug development industry," said Michael McKelvey, president and CEO of eRT.
Joe Herring, CEO and chairman of Covance, said, "Under the new marketing arrangement, we believe our clients will benefit from eRT's industry-leading centralized ECG services. The transaction also allows Covance's management team to focus more attention on growing our service offerings in the larger markets we serve."
eRT will adjust its previously issued Q4 2007 revenue guidance of $27 million to $28.5 million, adding approximately $1.5 to $2.0 million additional revenue as a result of the transaction.
In other dealmaking news:
- NNN Healthcare/Office REIT (Santa Ana, California) has acquired the Tucson Medical Office Portfolio (Arizona). The portfolio consists of two separate medical facilities — Desert Life Medical Plaza and 6261 North La Cholla Boulevard — in Tucson. The seven building portfolio totals more than 111,000 square feet and both properties are adjacent to Northwest Medical Center, a 300-bed full-service hospital. "Northwest Tucson has been one of the fastest growing areas of Tucson for the past 10 years," said Danny Prosky, vice president of acquisitions for NNN Healthcare/Office REIT. "The Tucson Medical Office Portfolio's location in a growing metropolitan region, along with its ready access to a major medical center, makes it an exceptional addition to our growing portfolio of medical properties. The Tucson Portfolio is approximately 66% leased, including tenants such as Fresenius Medical Care, Laboratory Corp of America and Genova Clinical Research. NNN Healthcare/Office REIT purchased the Tucson Medical Office Portfolio from unaffiliated third parties. Financing was provided by LaSalle Bank National Association. Asset management services will be provided by NNN Realty Advisors. Including the purchase of the Tucson Medical Office Portfolio, NNN Healthcare/Office REIT has acquired a portfolio of properties valued in excess of $315 million.
- Capella Healthcare (Franklin, Tennessee) reported signing a definitive agreement to purchase nine general acute care hospitals from Community Health Systems for $315 million. Both companies are working on the regulatory approval processes and expect to close the transaction by first quarter 2008. Funding for the deal will come from a combination of equity capital from Capella's partner GTCR Golder Rauner and debt financing led by Citigroup Global Markets, Banc of America Securities LLC and Merrill Lynch Capital. Merrill Lynch acted as M&A advisor to Capella on this transaction. Capella owns and operates five hospitals across the nation. Combined, the nine hospitals being acquired by Capella have 1,070 beds and employ nearly 4,000 people. They are: Willamette Valley Medical Center (McMinnville, Oregon); Saint Mary's Regional Medical Center (Russellville, Arkansas); National Park Medical Center (Hot Springs, Arkansas); Mineral Area Regional Medical Center (Farmington, Missouri); White County Community Hospital (Sparta, Tennessee); Parkway Medical Center (Decatur, Alabama); Woodland Medical Center (Cullman, Alabama); Hartselle Medical Center (Hartselle, Alabama); and Jacksonville Medical Center (Jacksonville, Alabama).