Private equity giant Bain Capital is making a bold move to fully acquire Surgery Partners Inc. (SGRY), a leading operator of surgical facilities. Bain Capital, already the largest shareholder, has submitted a proposal to purchase the remaining shares it doesn’t own, valuing the company at approximately $3.3 billion. This news has ignited investor interest, sending Surgery Partners Stock soaring.
The offer, delivered to the Surgery Partners board on January 27th, is priced at $25.75 per share. While Bain Capital acknowledges this is a non-binding proposal, they have indicated their intention to engage in discussions with Surgery Partners and potentially other parties to explore various strategic options. These options could include alternative acquisition proposals from other companies or investors, suggesting a competitive landscape may emerge for Surgery Partners.
In a formal letter to the board, Bain Capital investors highlighted that their proposal follows a recent review by the Surgery Partners board regarding the company’s future. This review included consideration of several potential transactions that ultimately did not materialize. Bain Capital believes their offer is now in the best interest of both the company and its stockholders, as stated by Bain Partners Devin O’Reilly and Andrew Kaplan. Crucially, Bain has clarified they are not interested in selling their existing stake, signaling a strong commitment to acquiring full ownership.
Surgery Partners operates an extensive network of over 200 facilities across 33 states, generating approximately $3.1 billion in annual revenue. The company was previously the subject of takeover rumors last year, with names like PE firm TPG Inc. and UnitedHealth Group Inc. mentioned as potential suitors.
Surgery Partners has confirmed receipt of Bain Capital’s proposal. The board of directors has formed a special committee to carefully review the offer. They emphasized that the proposal includes a condition requiring approval from a majority of shareholders excluding Bain Capital, ensuring the interests of minority investors are considered.
Besides Bain Capital, other significant institutional investors hold substantial positions in Surgery Partners. Fidelity Investments, Wellington Group, and The Vanguard Group collectively own around 27% of the company’s stock as of last spring, adding further weight to shareholder considerations in this potential acquisition.
The market reacted swiftly and positively to the news. Surgery Partners stock, trading under the ticker SGRY, jumped from below $21 to over $25 upon announcement of Bain Capital’s offer. While the stock had traded as high as $31 in mid-November following strong third-quarter results, the current offer has revitalized investor enthusiasm. On January 29th, SGRY stock was trading around $26, indicating market anticipation of either an improved offer from Bain Capital or interest from other potential acquirers.
RBC Capital Markets analyst Ben Hendrix suggests that Bain Capital’s move is likely to “accelerate interest” from other buyers. With Surgery Partners stock still trading below previous highs, the company remains an attractive target in the healthcare sector. The coming weeks could prove pivotal as the special committee evaluates Bain Capital’s proposal and the potential for a bidding war for Surgery Partners stock unfolds.
