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American Renal Associates Agrees to Private Equity Firm's $853 Million Buyout Offer

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Shares of American Renal Associates traded 67% higher and set a new 52-week high after the company reported that it has entered into a definitive agreement to be acquired by a Nautic Partners LLC affiliate for $11.50 per share in cash.

Outpatient dialysis services provider American Renal Associates Holdings Inc. (ARA:NYSE) today announced that "it has entered into a definitive agreement to be acquired by Innovative Renal Care LLC (IRC), an affiliate of Nautic Partners LLC (Nautic), a middle market private equity firm, in an all-cash transaction that values the company at an aggregate enterprise valuation of approximately $853 million excluding non-controlling interest."

The firm advised that according to the agreement terms, ARA shareholders will receive $11.50 per share in cash representing a 66% premium over the company's closing share price on Thursday, October 1, 2020.

American Renal Associates' Chairman and CEO Joe Carlucci commented, "At ARA, we have created a unique platform for delivering superior quality care to patients by partnering with physicians around the country. This transaction recognizes the value of the company and delivers a meaningful premium to shareholders...I have decided to delay my previously announced retirement in order to guide the company through this transaction and into its next stage. Nautic is a firm with significant healthcare expertise and we are excited by their support as we engage with members of the IRC team for the next chapter of our company's growth."

Nautic Partners' Managing Director Scott Hilinski remarked, "ARA has established itself as a leading provider of high-quality patient care for those suffering from end-stage renal disease. Since its founding, the company has built a successful track record working with leading nephrologists around the country while staying focused on its core values."

"We are excited to bring together ARA management and IRC's complementary team of executives as we look to support the company in executing against its strategic plan built on a differentiated, patient-centric approach to the renal care market," Dan Killeen, Principal at Nautic, added.

The report indicated that ARA's Board of Directors has unanimously approved the agreement, which it expects to close in Q1/21. The firms noted that the transaction remains subject to the satisfaction of customary closing conditions along with shareholder and regulatory approvals, and that ARA Renal Associates investor Centerbridge Partners has entered into a voting agreement to vote in favor of the transaction.

In addition, the agreement contains a 40-day "go-shop" provision whereby ARA's Board of Directors may solicit and consider alternative acquisition offers.

ARA is an outpatient dialysis services provider headquartered in Beverly, Mass. The company serves greater than 17,300 patients with end stage renal disease through 251 dialysis clinic locations in 27 states and the District of Columbia. The firm's business model is to partner with local nephrologists physician groups to develop, own and operate dialysis clinics.

Nautic Partners LLC was described in the news release as a middle-market private equity firm that focuses on healthcare, industrials and services. The report stated that the group's strategy is "to partner with management teams to accelerate the growth trajectory of its portfolio companies via add-on acquisitions, targeted operational initiatives, and increased management team depth." Nautic pointed out that in September 2019, it formed Innovative Renal Care, a new platform entity delivering a more comprehensive and integrated renal care model.

American Renal Associates began the day with a market capitalization of around $239.5 million with approximately 34.61 million shares outstanding and a short interest of about 2.4%. ARA shares opened 64% higher today at $11.35 (+$4.43, +64.02%) over yesterday's $6.92 closing price and reached a new 52-week high price this morning of $11.83. The stock has traded today between $11.31 and $11.83 per share and is presently trading at $11.56 (+$4.64, +67.05%).


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