Ex-Apria Exec Makes Offer of $1.45 Billion With Investor
Former Apria Healthcare Group Inc. executive Timothy M. Aitken and a major New York investor made an unexpected bid of $1.45 billion in cash and stock Monday for the troubled home health-care company.
Aitken’s Transworld HealthCare Inc. in New York and its 70% owner, Hyperion Partners, said in a letter to the Apria board that they would pay $14 in cash and $4 in the merged company’s stock for each share of Apria, one of the nation’s largest home health-care companies.
The offer bypassed the process that Apria had set up last spring when it hired investment banker Goldman, Sachs & Co. to find a merger partner or some other financial help.
Hyperion’s managing partner, Lewis S. Ranieri, said in the letter that his group has “the necessary debt and equity financing standing ready” to commit to the deal quickly.
Though unexpected, the offer for the Costa Mesa company is friendly, said Transworld spokeswoman Susan Lewis.
“This is a newly formulated proposal that went directly to the [Apria] board,” she said.
She would not elaborate on the Hyperion-Transworld offer, saying it was too soon to discuss such matters as how the companies would be merged, where it would be headquartered and how many employees, if any, would be laid off.
Industry analysts say the proposal is expected to accelerate the bidding process. But Apria said it has nearly completed its review of about 30 plans brought in by Goldman.
“We expect to have some indication of the type of transaction we’ll do by later this month or early November,” said Apria spokeswoman Sheree Aronson. The company will consider the Hyperion-Transworld offer as well, she said.
Apria was itself forged in the 1995 merger of Abbey Healthcare Group Inc. and Homedco Group Inc., but it has yet to reap the benefits from that merger, and shareholders are complaining.
Beset by breakdowns in its collections systems, unprofitable business ventures and rapid changes in its industry, Apria took a $95-million charge in the second quarter and posted a $50.6-million loss for the first six months.
Its stock, trading above $22 a share last November, dropped to a 12-month low of $12.75 two weeks ago. It has climbed since, closing Monday at $16.25 a share, up $1.56, on the New York Stock Exchange.
Apria, with more than 8,200 employees, provides home health services from 350 locations in all 50 states. Its revenue was $1.2 billion last year.
Transworld has 400 employees providing outpatient and home health-care services mainly in the New York-New Jersey region. It also provides medical supplies and mail-order pharmaceuticals. Its revenue was $76.3 million last year.
Aitken’s involvement drew mixed reactions from industry experts, who recall that he left Apria five months after the merger and ended up with total compensation that year of $5.5 million.
“He lends more credence to the bid,” said Tom Burnett of Merger Insight in New York. “This won’t be a minnow swallowing the whale because you’ve got somebody who knows the company well. He knows where the skeletons are.”
