By VICKI URBANIK

The company that’s in the process of buying the county hospital Porter Memorial is in the process of getting acquired itself.

Triad Hospitals, Inc., the nation’s third largest health care company, has entered into a definitive merger agreement for $4.7 billion with two private equity buyers: CCMP Capital and GS Capital Partners.

With $1.7 billion of debt, the transaction totals approximately $6.4 billion.

CCMP was formed in August, 2006 by JP Morgan Partners, a private equity division of investment bank J.P. Morgan Chase. GS Capital Partners, established in 1992, is an arm of investment bank Goldman Sachs.

Triad, which made the Fortune 500 list in 2004, is a for-profit company publicly traded on the New York Stock Exchange (NYSE: TRI). With the agreement announced Monday, CCMP Capital and GSCP will acquire all outstanding shares of Triad common stock, with shareholders to receive $50.25 per share in cash.

According to a Reuters report on Monday, some analysts are predicting that more hospital chains will go private — meaning that they won’t be publicly traded and won’t pay dividends to shareholders —in order to avoid the scrutiny that comes with being a publicly traded company. Reuters also reported that the takeover offer for Triad comes amid criticism from a hedge fund for Triad to boost its stock performance.

The Porter Hospital Board of Trustees announced in January of last year that it was looking for a partner of some sort in order to build a new Valparaiso hospital campus, on the grounds that the county hospital lacks the capital itself for the new facility. In December, the hospital board announced its intent to sell the hospital assets to Triad, based in Plano, Texas.

Hospital Board President Richard Wathen said in the short-term, the deal won’t affect the ongoing negotiations between Triad and hospital and county officials now working on a final agreement.

He said Triad’s management will remain intact and the Triad representatives now negotiating with Porter won’t change.

The hospital still has a goal to finalize the final sale by April 1, Wathen said.

In the long-term, Wathen said he thinks the deal is “a good thing” for the local hospital. With a publicly traded company, he said, there are always pressures from shareholders to increase the value of the stock. Privately held stock, he said, allows the owners to carry out a long-term model.

“I think it’s good that they have a long-term perspective and not be driven by the short-term,” he said.

Wathen added that Porter hospital officials selected Triad because it shares its management philosophy, and that CCMP Capital and GSCP are “two new partners coming in” who support Triad’s long-term goals as well.

“I want a health care provider that’s interested in a long-term health care perspective, rather than someone interested in the next day’s earnings,” he said.

Wathen noted that last year HCA Inc., the national’s largest hospital chain, accepted a management-led leveraged buyout.

Wathen said he wasn’t aware of the deal until Monday. In a press release, Triad Chairman and CEO James Shelton said the decision is the culmination of a strategic planning process that was initiated several months ago “to explore the various options available (to Triad) to enhance shareholder value.

“We are pleased that this transaction appropriately recognizes the importance of Triad’s collaborative approach to working with the many constituencies that we serve while providing our stockholders with a cash premium for their investment in Triad. CCMP Capital and Goldman Sachs are experienced investors in healthcare services, with a solid understanding of the opportunities and challenges that face Triad today. They will be supportive shareholders of the Company, and we look forward to working closely with them in the years ahead.”

Stephen Murray, Managing Director with CCMP Capital, said, “Triad is an exceptional company, with a clear vision and a strong commitment to its patients, physicians and employees. CCMP Capital and Goldman Sachs share this vision and commitment.”

Adrian Jones, Managing Director with GSCP, said, “We are excited by the opportunity to work with Triad management. Denny and his team have built a superb company over the past seven years, and have developed an innovative growth plan, including partnerships with not-for-profit hospitals, that we will fully support.”

Under the takeover agreement, Triad may solicit superior proposals from third parties during the next 40 days. If a superior proposal is solicited, Triad would have to pay a $20 million break-up fee and reimburse up to $20 million of CCMP and GSCP expenses.

The deal is subject to certain closing conditions, including the approval of Triad’s stockholders and regulatory approvals. Triad will hold a special meeting of stockholders to vote on the agreement, and will postpone its 2007 annual meeting of stockholders pending the outcome of the special meeting.

Posted 2/6/2007