DaVita to pay $4.42 billion for HealthCare Partners

DaVita, whose biggest shareholder is billionaire Warren Buffett's Berkshire Hathaway, will pay about $4.42 billion in cash and stock to acquire HealthCare Partners, which has key operations in Southern Nevada and two other states.

DaVita, a U.S. provider of kidney dialysis services, will pay about $3.66 billion in cash, plus 9.38 million shares of its stock, which had a value of $758 million as Friday, for closely held HealthCare Partners, the companies said Monday.

Denver-based DaVita has purchased companies in the United States, Germany and India to meet rising demand for dialysis services as the number of people with diabetes increases.

HealthCare Partners of Torrance, Calif., manages medical groups and physician networks, providing services to more than 667,000 patients with 700 physicians employed by the company or its affiliates. The company, whose key operations are in Southern Nevada, California and Florida, had about $2.4 billion in revenues in 2011.

"We believe our combined enterprise will offer new and exciting levels of clinical quality, service, and consumer and taxpayer savings," said Kent Thiry, Davita's chairman and CEO.

Neither company returned calls seeking comment on how the deal would affect Nevada operations, but both have a substantial local presence.

DaVita runs 13 dialysis centers in Southern Nevada and calls Las Vegas the No. 1 visitor destination among its patients. DaVita's website review of its Las Vegas operation reads like a travel guide, highlighting the city's shopping, helicopter tours, shows, art museums and golf courses. It even offers advice on how to avoid long buffet lines.

HealthCare Partners Nevada bills itself as a 16-year-old network of more than 200 primary-care doctors and more than 1,300 specialists in more than 50 clinics in Las Vegas, North Las Vegas, Henderson, Boulder City and Pahrump.

The purchase price is about 8.4 times HealthCare Partners' 2011 earnings before interest, tax, depreciation and amortization of $527 million. That compares with a median of 9.7 times EBITDA for seven deals announced in the last three years, according to data compiled by Bloomberg.

The transaction will probably close early in the fourth quarter and the combined entity will be known as DaVita HealthCare Partners, the companies said. The cash portion of the purchase price will be funded through available cash, credit and debt financing, they said. Once merged with DaVita, HealthCare Partners will operate as a separate subsidiary of the new company.

Berkshire Hathaway has a 6.4 percent stake in DaVita, according to data compiled by Bloomberg. The Omaha, Neb.-based company reported in March that it had more than doubled the number of shares it owns in first-quarter 2011.

DaVita is the second-largest dialysis provider in the U.S., operating or administrating 1,809 dialysis facilities serving about 142,000 patients.

Review-Journal reporter Jennifer Robison and the Bloomberg News Service contributed to this report.