Universal Health Services Inc. (NYSE:UHS) signed a definitive agreement to acquire Ascend Health Corporation from Three Arch Partners, CHL Medical Partners, Polaris Venture Partners, Inc., Altos Health Management, Inc. and other investors for approximately $520 million on June 3, 2012. The deal value includes $500 million in cash for common stock, series A and B preferred stock and options of Ascend and $17 million in assumption of debt of Ascend Health Corporation. A portion of the merger consideration will be placed in a third party escrow until September 3, 2013 as security for the indemnification obligations of Ascend equity holders. As reported, Universal Health Services Inc. will pay additional $1 million to Ascend Health Corporation if transaction is not terminated prior to October 1, 2012, $1.5 million if transaction is not terminated prior to November 1, 2012, $2 million if transaction is not terminated prior to December 1, 2012, and $20 million if transaction is not terminated prior to January 1, 2013.

The transaction is subject to customary closing conditions, including Ascend stockholder approval, regulatory approvals and clearance under the Hart-Scott-Rodino Act. Also, as of October 5, 2012, Universal Health must divest at least one and possibly two healthcare facilities in the El Paso market to win antitrust approval. Therefore, Universal Health agreed to divest its El Paso acute inpatient psychiatric facility. The respective Boards of Directors of Universal Health Services and Ascend and shareholders of Ascend have approved the deal. The transaction is expected to close in fourth quarter of 2012. The transaction is expected to be immediately accretive to earnings for Universal Health Services Inc.

Goldman, Sachs & Co. acted as financial advisor and Jonathan Schaffzin, Michael Sherman, Elai Katz, Craig Horowitz and Glenn Waldrip Jr. of Cahill Gordon & Reindel LLP acted as legal advisor for Ascend Health Corporation. Jeff Stute, Cory Rapkin, Chris Martell, Matt Mainelli, Nikul Patel and Bradley Watts of J.P. Morgan Securities LLC acted as financial advisor and Minh Van Ngo, Travis J. Wofford, Michael L. Schler, Jonathan J. Katz, Eric W. Hilfers, Michael Krasnovsky, Matthew Cantor, Christine A. Varney, Veena Viswanath, John Gerhard, Matthew Morreale and Daniel Satin of Cravath, Swaine & Moore LLP acted as legal advisor for Universal Health Services Inc. Citibank, N.A. acted as escrow agent.

Universal Health Services Inc. (NYSE:UHS) completed the acquisition of Ascend Health Corporation from Three Arch Partners, CHL Medical Partners, Polaris Venture Partners, Inc., Altos Health Management, Inc. and other investors on October 10, 2012. The transaction was approved by Federal Trade Commission. Universal Health Services has agreed to certain conditions, including the divestiture of its facility in New Mexico within approximately six months.