Bon Secours Mercy Health affiliate agrees to buy Surgery Partners at a $5.7B enterprise value

HealthSpan Partners has agreed to acquire Surgery Partners in an all-cash deal valued at an enterprise value of approximately $5.7 billion. Shareholders other than Bain Capital affiliates will receive $23.50 per share in cash, according to the joint press release attached to Surgery Partners’ 8-K filed October 26. HealthSpan is a contractual affiliate and supporting organization of Bon Secours Mercy Health, which signed the merger agreement, dated October 23, as guarantor of the buyer’s obligations, subject to limits in the agreement. The acquiring entity is Spyglass Topco, LLC.

Bain is not cashing out. Its affiliates, the largest shareholder with about 39% of outstanding shares, signed a voting and support agreement to vote for the deal. Immediately before closing they will contribute their shares to the buyer for equity in it. Bain will remain “a significant partner in Surgery Partners with HealthSpan Partners following closing,” the release says.

That structure shapes the vote. A special committee of independent and disinterested directors led the negotiations, and the board approved the deal on the committee’s unanimous recommendation. Approval takes a majority of outstanding shares plus a majority of votes cast by disinterested stockholders. That second group excludes the Bain entities, directors and officers. Closing also requires expiration or termination of the Hart-Scott-Rodino waiting period. The companies expect to close in the first quarter of 2027. Either side can terminate if the deal has not closed by July 23, 2027, a date that can be extended automatically in specified circumstances. Surgery Partners would owe a $108,986,842 termination fee in specified cases, including terminating before the vote to sign a superior proposal.

HealthSpan plans to fund the purchase with cash on hand and new debt, with Jefferies providing committed financing as sole initial underwriter. The merger carries no financing condition. At June 30, Surgery Partners reported net debt of about 4.4x EBITDA under its credit agreement, as we reported.

The company would keep its name, brand and Brentwood, Tennessee headquarters. Its stock would leave Nasdaq. Under the new owner it is expected to remain a secular organization that operates in compliance with “the Statement of Common Values” and “will not be characterized as a Catholic ministry entity.” Per the release, it brings more than 200 locations in 30 states and about 5,000 affiliated physicians.

CEO Eric Evans said the deal is “delivering an attractive all-cash premium to our shareholders.” The release does not quantify that premium.

The agreement comes three months after Surgery Partners agreed to sell its Idaho Falls hospitals to Intermountain Health, and after Ascension closed its AMSURG acquisition in June. Next come the shareholder documents: Surgery Partners will file a proxy statement, and it and other filing persons intend to jointly file a transaction statement on Schedule 13E-3. Neither has a filing date yet.