Tenet Healthcare Corp. (NYSE:THC) signed a definitive agreement to acquire Vanguard Health Systems Inc. (NYSE:VHS) from a group of shareholders for $1.8 billion in cash on June 24, 2013. The group of shareholders include Morgan Stanley Capital Partners IV, L.P. and Morgan Stanley Capital Partners III, L.P., fund of Metalmark Capital LLC, Lexington Partners Inc., The Blackstone Group, Private Equity Group, Morgan Stanley Capital Investors L.P., Charles N. Martin, Keith B. Pitts, Phillip W. Roe, James H. Spalding and other investors. As part of consideration, Tenet Healthcare will pay $21 for each share of Vanguard Health. Tenet Healthcare will also acquire option and restricted stock units. Tenet has secured fully committed financing from Bank of America Merrill Lynch and Merrill Lynch, Pierce, Fenner & Smith Incorporated. Bank of America, N.A. has committed to provide a $1.8 billion senior secured term credit facility and a $2.8 billion senior unsecured bridge credit facility, on the terms and subject to the conditions set forth in a debt commitment letter. Upon closing, Charlie Martin, Vanguard's founder, Chairman and Chief Executive Officer, will join Tenet's Board of Directors. Keith Pitts, Vanguard's Vice Chairman, will join the Tenet senior management team as Vice Chairman. Vanguard Health Systems will pay $61 million as termination fee to Tenet Healthcare.

In connection with the transaction, Tenet entered into a voting agreement with certain funds affiliated with each of The Blackstone Group and Morgan Stanley Capital Partners, as well as Charles N. Martin, Keith B. Pitts, Phillip W. Roe, and James H. Spalding, constituting approximately 54.7% of the voting power of the issued and outstanding shares of common stock of Vanguard. The transaction is subject to customary closing conditions, regulatory approvals, approval by shareholders of Vanguard Health Systems and antitrust approval. The Board of Directors of Tenet Healthcare and Vanguard Health Systems have unanimously approved the transaction. The transaction is expected to close early in our second quarter of fiscal 2014. Tenet expects the transaction to be accretive to earnings in the first year.

Dennis J. Friedman and Barbara L. Becker of Gibson Dunn & Crutcher acted as legal advisors and Lazard Freres & Co. LLC, Bank of America Merrill Lynch, Barclays and Teneo Capital acted as financial advisors for Tenet Healthcare. Joseph A. Coco, Peter D. Serating, John D. Rayis, and Regina Olshan of Skadden, Arps, Slate, Meagher & Flom acted as legal advisors and J.P. Morgan Securities LLC acted as financial advisor for Vanguard Health. Denise A. Cerasani of White & Case LLP acted as legal advisor for Lazard. Wilson Neely, Shabarika Ajitkumar and Michael Monteleone of Simpson Thacher & Bartlett LLP acted as legal advisors for The Blackstone Group. John Bick and Daniel Brass of Davis Polk & Wardwell acted as legal advisors for Morgan Stanley Capital and Vanguard Health Systems Inc. Raymond DiCamillo of Richards, Layton & Finger, P.A. acted as legal advisor for Tenet Healthcare Corp. J.P. Morgan Securities LLC would be paid $25 million as advisory fee.

Tenet Healthcare Corp. (NYSE:THC) completed the acquisition of Vanguard Health Systems Inc. (NYSE:VHS) from a group of shareholders on October 1, 2013. As a result of the closing of this acquisition, Vanguard Health Systems (NYSE:VHS) has ceased trading on the New York Stock Exchange.