TA Associates Selling Triumph HealthCare

(Reuters) – Physical rehabilitation services provider RehabCare Group Inc (RHB.N) said it agreed to merge with privately held Triumph HealthCare, a long-term acute care hospitals operator, for about $570 million, to create the fourth-largest U.S. post-acute hospital operator.

RehabCare said it will finance the deal through a combination of bank financing, equity and/or seller financing in the form of its convertible preferred stock and cash on hand.

Other details of the merger were not given.

RehabCare, which expects the merger to be “meaningfully accretive” to 2010 earnings, had $34.5 million in cash and cash equivalents and $26.7 million in outstanding debt as of Sept. 30.

The company said BofA Merrill Lynch, Royal Bank of Canada and BNP Paribas have provided a commitment for a new senior secured credit facility consisting of a $500 million term loan facility and a $125 million revolving credit facility.

RehabCare expects to incur one-time merger related expenses of about $9 million to $10 million, on a pre-tax basis, in the fourth quarter.

Shares of RehabCare rose 6 percent to $20.00 in post-market trade. They closed at $18.95 Tuesday in the New York Stock Exchange. (Reporting by Anuradha Ramanathan in Bangalore; Editing by Anne Pallivathuckal)

peHUB Note: The seller is TA Associates, which bought Triumph in 2004 in a leveraged deal that included $34.5 million in equity. It had already returned its investment several times over, via a pair of dividend recaps.