ARA Shareholders to Receive $11.50 Per Share in
Cash
American Renal Associates Holdings, Inc. (NYSE: ARA) (“ARA” or
the “Company”), a leading provider of outpatient dialysis services,
today announced that it has entered into a definitive agreement to
be acquired by Innovative Renal Care, LLC (“IRC”), an affiliate of
Nautic Partners, LLC (“Nautic”), a middle market private equity
firm, in an all-cash transaction that values the Company at an
aggregate enterprise valuation of approximately $853 million
excluding non-controlling interest. Under the terms of the
agreement, ARA shareholders will receive $11.50 per share in cash.
This consideration represents an approximate premium of 66% to the
Company’s closing price on October 1st, 2020.
“At ARA, we have created a unique platform for delivering
superior quality care to patients by partnering with physicians
around the country. This transaction recognizes the value of the
Company and delivers a meaningful premium to shareholders,” said
Joe Carlucci, Chairman and Chief Executive Officer of ARA. “I have
decided to delay my previously announced retirement in order to
guide the Company through this transaction and into its next stage.
Nautic is a firm with significant healthcare expertise and we are
excited by their support as we engage with members of the IRC team
for the next chapter of our Company’s growth -- drawing on our deep
relationships with our physician partners and our talented staff to
continue providing excellent care to end-stage renal disease
patients across the U.S. We also want to thank Centerbridge
Partners for their thoughtful support over these past 10
years.”
Scott Hilinski, Managing Director at Nautic, said, “ARA has
established itself as a leading provider of high-quality patient
care for those suffering from end-stage renal disease. Since its
founding, the Company has built a successful track record working
with leading nephrologists around the country while staying focused
on its Core Values.”
Dan Killeen, Principal at Nautic, added, “We are excited to
bring together ARA management and IRC’s complementary team of
executives as we look to support the Company in executing against
its strategic plan built on a differentiated, patient-centric
approach to the renal care market.”
The Board of Directors of ARA unanimously approved the
agreement. The transaction is expected to close in the first
quarter of 2021, subject to shareholder and regulatory approvals,
as well as the satisfaction of customary closing conditions.
Centerbridge Partners has entered into a voting agreement pursuant
to which it has agreed to vote in favor of the transaction.
The agreement includes a 40-day “go-shop” period, which permits
ARA’s Board of Directors, with the assistance of independent
financial and legal advisors, to actively solicit alternative
acquisition proposals from third parties, and potentially enter
into negotiations with parties that make alternative acquisition
proposals. The Board has appointed a special committee of
independent directors to oversee the go-shop process. ARA will have
the right to terminate the agreement with Nautic to enter into a
superior proposal subject to the terms and conditions of the
agreement. There can be no assurance that this process will result
in a superior proposal, and ARA does not intend to disclose
developments with respect to the solicitation process unless and
until its special committee or the Board of Directors makes a
determination requiring further disclosure. The period commences on
the date of the agreement.
Investment funds and accounts managed by HPS Investment
Partners, LLC provided committed financing for the transaction.
Goldman Sachs & Co. LLC is serving as financial advisor to
ARA, and Latham & Watkins LLP is serving as legal advisor to
ARA. BofA Securities is serving as financial advisor to the special
committee of the Board of Directors of ARA managing the go-shop
process and Richards, Layton & Finger, PA is serving as its
legal advisor. Guggenheim Securities, LLC is serving as financial
advisor to Nautic, and Goodwin Procter LLP and Epstein, Becker
& Green, P.C. are serving as its legal advisors. Raymond James
& Associates, Inc. also served as an investment banking advisor
to IRC.
Additional Information and Where to Find It
This communication may be deemed solicitation material in
respect of the proposed acquisition of ARA by Nautic. This
communication does not constitute a solicitation of any vote or
approval. In connection with the proposed merger, ARA plans to file
with the Securities and Exchange Commission (the “SEC”) and mail or otherwise provide to its
stockholders a proxy statement regarding the proposed transaction.
ARA may also file other documents with the SEC regarding the
proposed transaction. This document is not a substitute for the
proxy statement or any other document that may be filed by ARA with
the SEC. ARA’S STOCKHOLDERS ARE URGED TO READ THE PROXY
STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER
DOCUMENTS FILED BY ARA WITH THE SEC IN CONNECTION WITH THE PROPOSED
TRANSACTION OR INCORPORATED BY REFERENCE THEREIN BEFORE MAKING ANY
VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED
TRANSACTION BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED
TRANSACTION. Investors and stockholders may obtain a free copy
of the proxy statement and other documents ARA files with the SEC
(when available) through the website maintained by the SEC at
www.sec.gov. ARA makes available free of charge at
www.americanrenal.com (in the “SEC Filings” section under the
“Investor Relations” heading), copies of materials it files with,
or furnishes to, the SEC.
Participants in the Solicitation
ARA and its directors, executive officers and certain employees
and other persons may be deemed to be participants in the
solicitation of proxies from ARA’s stockholders in connection with
the proposed merger. Security holders may obtain information
regarding the names, affiliations and interests of ARA’s directors
and executive officers in ARA’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2019, which was filed with the SEC
on March 16, 2020, and its definitive proxy statement for the 2020
annual meeting of stockholders, which was filed with the SEC on
March 20, 2020, including the definitive additional materials filed
with the SEC on April 24, 2020. To the extent the holdings of ARA
securities by ARA’s directors and executive officers have changed
since the amounts set forth in ARA’s proxy statement for its 2020
annual meeting of stockholders, such changes have been or will be
reflected on Statements of Change in Ownership on Form 4 filed with
the SEC. Additional information regarding the interests of such
individuals in the proposed merger will be included in the proxy
statement relating to the proposed merger when it is filed with the
SEC. These documents (when available) may be obtained free of
charge from the SEC’s website at www.sec.gov and ARA’s website at
www.americanrenal.com.
Cautionary Statement Regarding Forward-Looking
Statements
This communication contains certain information, including
financial estimates and statements as to, among other things, the
expected timing, completion and effects of the proposed merger
between ARA and IRC Superman Midco, Inc. (“Parent”), which may
constitute forward-looking statements within the meaning of the
“safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995. These statements are subject to risks and
uncertainties, and actual results may materially differ. All
statements other than statements of historical fact or relating to
present facts or current conditions included in this communication
are forward-looking statements. Such forward-looking statements
include, among others, ARA’s current expectations and projections
relating to its financial condition, results of operations, plans,
objectives, future performance and business. You can identify
forward-looking statements by the fact that they do not relate
strictly to historical or current facts. These statements may
include words such as “anticipate,” “estimate,” “expect,”
“project,” “seek,” “plan,” “intend,” “believe,” “will,” “may,”
“could,” “continue,” “likely,” “should” and other similar
words.
The forward-looking statements contained in this communication,
including without limitation statements regarding anticipated
benefits and effects of the anticipated merger of ARA and Parent,
are based on assumptions that ARA has made in light of its industry
experience and its perceptions of historical trends, current
conditions, expected future developments and other factors that ARA
believes are appropriate under the circumstances. These statements
are not guarantees of performance or results. These assumptions and
ARA’s future performance or results involve risks and
uncertainties, many of which are beyond ARA’s control. Such risks
and uncertainties include, among others, the inability to
consummate the Merger within the anticipated time period, or at
all, due to any reason, including the failure to obtain required
regulatory approvals or the failure to satisfy the other conditions
to the consummation of the Merger; the failure by Parent or Merger
Sub to obtain the necessary debt and equity financing arrangements
set forth in the commitment letters received in connection with the
Merger; the risk that the Merger Agreement may be terminated in
circumstances requiring ARA to pay a termination fee; the risk that
the Merger disrupts ARA’s current plans and operations or diverts
management’s attention from its ongoing business; the effect of the
announcement of the Merger on the ability of ARA to retain and hire
key personnel and maintain relationships with its customers,
suppliers, physician partners and others with whom it does
business; the effect of the announcement of the Merger on ARA’s
operating results and business generally; the amount of costs, fees
and expenses related to the Merger; the risk that ARA’s stock price
may decline significantly if the Merger is not consummated; the
nature, cost and outcome of any litigation and other legal
proceedings, including any such proceedings related to the Merger
and instituted against ARA and others; the effect of the ongoing
COVID-19 pandemic and responses thereto; the effect of the
restatement of ARA’s previously issued financial results and
related matters and the related SEC investigation; ARA’s ability to
remediate material weaknesses in ARA’s internal control over
financial reporting; continuing decline in the number of patients
with commercial insurance or any regulatory or other changes
leading to changes in the ability of patients with commercial
insurance coverage to receive charitable premium support; decline
in commercial payor reimbursement rates; reduction of
government-based payor coverage and reimbursement rates or
insufficient rate increases or adjustments that do not cover all of
ARA’s operating costs; ARA’s ability to successfully develop de
novo clinics, acquire existing clinics and attract new nephrologist
partners; ARA’s ability to compete effectively in the dialysis
services industry; the performance of ARA’s joint venture
subsidiaries and their ability to make distributions to ARA;
federal or state healthcare laws that could adversely affect ARA;
ARA’s ability to comply with all of the complex federal, state and
local government regulations that apply to its business, including
those in connection with federal and state anti-kickback laws and
state laws prohibiting the corporate practice of medicine or
fee-splitting; heightened federal and state investigations and
enforcement efforts; changes in the availability and cost of
erythropoietin-stimulating agents and other pharmaceuticals used in
ARA’s business; development of new technologies or government
regulation that could decrease the need for dialysis services or
decrease ARA’s in-center patient population; ARA’s ability to
timely and accurately bill for ARA’s services and meet payor
billing requirements; claims and losses relating to malpractice,
professional liability and other matters; the sufficiency of ARA’s
insurance coverage for those claims and rising insurances costs,
and negative publicity or reputational damage arising from such
matters; loss of any members of ARA’s senior management; damage to
ARA’s reputation or ARA’s brand and ARA’s ability to maintain brand
recognition; ARA’s ability to maintain relationships with its
medical directors and renew its medical director agreements;
shortages of qualified skilled clinical personnel, or higher than
normal turnover rates; competition and consolidation in the
dialysis services industry; deterioration in economic conditions,
particularly in states where we operate a large number of clinics,
or disruptions in the financial markets or the effects of natural
or other disasters, public health crises or adverse weather events;
the participation of ARA’s physician partners in material strategic
and operating decisions and ARA’s ability to favorably resolve any
disputes; ARA’s ability to honor obligations under the joint
venture operating agreements with its physician partners were they
to exercise certain put rights and other rights; unauthorized
disclosure of personally identifiable, protected health or other
sensitive or confidential information; ARA’s ability to meet its
obligations and comply with restrictions under its substantial
level of indebtedness; and the ability of ARA’s principal
stockholder, whose interests may conflict with yours, to strongly
influence or effectively control ARA’s corporate decisions. For
additional information, please see ARA’s filings with the SEC.
Additional factors or events that could cause ARA’s actual
performance to differ from these and other forward-looking
statements may emerge from time to time, and it is not possible for
ARA to predict all of them. Should one or more of these risks or
uncertainties materialize, or should any of its assumptions prove
incorrect, ARA’s actual financial condition, results of operations,
future performance and business may vary in material respects from
the performance projected in these forward-looking statements.
Any forward-looking statement made in this communication speaks
only as of the date on which it is made. ARA undertakes no
obligation, and expressly disclaims any obligation, to update,
alter or otherwise revise any forward-looking statement, whether
written or oral, that may be made from time to time, whether as a
result of new information, future developments or otherwise, except
as may be required by law.
About American Renal Associates
American Renal Associates (“ARA”) is a leading provider of
outpatient dialysis services in the United States. As of June 30,
2020, ARA operated 251 dialysis clinic locations in 27 States and
the District of Columbia serving more than 17,300 patients with end
stage renal disease. ARA operates principally through a physician
partnership model, in which it partners with local nephrologists to
develop, own and operate dialysis clinics. ARA’s Core Values
emphasize taking good care of patients, providing physicians with
clinical autonomy and support, hiring the best possible staff and
providing best practices management. For more information about
American Renal Associates, visit www.americanrenal.com.
About Nautic Partners, LLC
Nautic Partners, LLC (“Nautic”) is a middle-market private
equity firm that focuses on three industries: healthcare,
industrials, and services. Nautic has completed over 140 platform
transactions throughout its 34-plus year history. Nautic’s strategy
is to partner with management teams to accelerate the growth
trajectory of its portfolio companies via add-on acquisitions,
targeted operational initiatives, and increased management team
depth. For more information, please visit www.nautic.com.
In September 2019, Nautic supported an experienced management
team in the formation of Innovative Renal Care (“IRC”), a new
platform entity focused on deploying a more comprehensive and
integrated renal care model.
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version on businesswire.com: https://www.businesswire.com/news/home/20201002005131/en/
For American Renal Associates:
Investors: Mark Herbers, Interim CFO Telephone: (978)-522-3945
Email: mherbers@americanrenal.com Media: Jeremy Fielding / Anntal
Silver jeremy.fielding@kekstcnc.com / anntal.silver@kekstcnc.com
For Nautic Partners and IRC: Allan M.
Petersen, Managing Director, Investor Relations
APetersen@nautic.com
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