Acadia Healthcare executives on Wednesday announced the sale of their struggling United Kingdom division for $1.35 billion, down 25 percent from what the Franklin-based behavioral health company bought it for in 2016.
Acadia has struck a deal with European private equity firm Waterland, whose portfolio spans label printing, live entertainment, nutrition, acute care and specialty clinics, logistics, debt collection, radar systems, car batteries, among others. The sale is expected to close next month.
“Since announcing our decision to explore strategic alternatives with respect to the Priory Business, our primary objective has always been to complete a transaction that would maximize value for our stockholders,” Acadia CEO Debbie Osteen said in a release. “Following a comprehensive process, we believe we have achieved this objective. We intend to use the proceeds to pay down debt and for other corporate purposes. [...] We will continue to focus on delivering the highest level of patient care and advancing our position as a leading behavioral healthcare facilities operator in the U.S.”
Osteen and her team began exploring a sale of The Priory Group in May of last year and, with the help of British banking dynasty Rothschild, had expected to complete a deal by the second quarter of this year. Osteen in March suspended sales negotiations as the COVID-19 pandemic brought market volatility and shifted company priorities. Talks resumed in September, and at the time, Acadia had received multiple initial bids for up to $1.2 billion.
Priory has been dragging down Acadia’s overall financial performance since its acquisition in 2016 and has been subject to multiple reports of abuse, mismanagement and chronic closures by media outlets throughout the U.K. By the end of Acadia's third quarter, facilities in the United Kingdom made up more than half of the company's revenue but less than 30 percent of its total earnings.
Acadia purchased Priory in February 2016 for $2.2 billion. At the time, Priory was the leading independent provider of behavioral health care services in the U.K. and operated 324 facilities and more than 7,100 beds. At the direction of U.K. regulators later that year, Acadia sold 22 Priory facilities accounting for approximately 1,000 beds to BC Partners for nearly $400 million. As of the point of sale, the U.K. network included 353 facilities and 8,500 beds.
Acadia shares (Ticker: ACHC) were up 3 percent to $50.08 on Tuesday morning.