US hospitals scrap $320 million deal after FTC court win
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[June 19, 2024]
By Mike Scarcella
(Reuters) - Healthcare company Novant Health said on Tuesday that it is
abandoning a $320 million deal to acquire two North Carolina hospitals
from Community Health Systems, after a U.S. appeals court temporarily
blocked the transaction.
Siding with the U.S. Federal Trade Commission, the Richmond,
Virginia-based 4th U.S. Circuit Court of Appeals ruled 2-1 on Tuesday to
suspend the deal while the FTC challenged a lower court's decision that
let the acquisition move forward.
Winston-Salem, North Carolina-based Novant said soon afterward that it
was scrapping its plan to purchase the two Charlotte-area hospitals.
"We are steadfast in our belief that these facilities and their patients
would have greatly benefited from joining Novant Health, but with the
FTC’s continued roadblocks we do not see a way to finalize this
transaction," the company said in a statement.
The FTC and lawyers and spokespeople for Franklin, Tennessee-based
Community Health Systems did not immediately respond to requests for
comment.
The FTC sued to block the transaction in January after filing an
administrative action challenging the deal, claiming it would lead to
higher prices and reduced innovative care.
Siding with the hospital companies, U.S. District Judge Kenneth Bell in
Charlotte said in a June 5 decision that the public interest was not
“best served” by stopping Novant’s proposed transaction.
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The merger “carries at least as much likelihood of competitive
benefits as it does competitive harm,” the judge wrote.
The FTC appealed Bell’s order to the 4th Circuit and askedthe court
to halt the transaction in the meantime.
FTC Chair Lina Khan has said the healthcare markets are a priority
in the Biden administration’s antitrust enforcement agenda.
A hearing in the agency's administrative case against the hospital
deal was set for July 26.
The case is Federal Trade Commission v. Novant Health Inc and
Community Health Systems Inc, 4th U.S. Circuit Court of Appeals, No.
24-1526.
For FTC: Benjamin Aiken of FTC
For Novant: Heidi Hubbard and Sarah Harris of Williams & Connolly
For Community Health Systems: Michael Perry and Jamie France of
Gibson, Dunn & Crutcher
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