[LETTERHEAD]
TENET TO MERGE WITH ORNDA IN TRANSACTION
VALUED AT $3.1 BILLION
Combination Creates Company with $8.5 Billion in Revenues
NEW YORK, N.Y. - OCTOBER 17, 1996 - Tenet Healthcare Corporation and OrNda
HealthCorp today jointly announced the signing of a definitive merger agreement
under which Tenet will acquire OrNda. The transaction values OrNda at more than
$3.1 billion. The resulting company will have pro forma revenues of
approximately $8.5 billion and operate 126 acute care hospitals in 22 states,
principally through the Sunbelt.
Under terms of the agreement, which was approved yesterday by the boards of
both companies, OrNda shareholders will receive 1.35 shares of Tenet common
stock for each share of OrNda stock in a tax-free exchange. Based on
approximately 60 million fully diluted OrNda shares and yesterday's closing
price of $22.1/8 per Tenet share. OrNda shareholders would receive $1.8 billion
in Tenet stock.
The pooling of interests transaction will create a consolidated company
with pro forma
-more-
earnings before interest, taxes, depreciation and amortization (EBITDA) of
approximately $1.5 billion. The transaction will be accretive to earnings per
share.
"Joining these dynamic companies continues the momentum begun with the
creation of Tenet," said Jeffrey C. Barbakow, Tenet chairman and chief executive
officer. "Less than two years ago, we created a new force in healthcare with
the formation of Tenet. At that time, we committed ourselves to the delivery of
quality, community-based healthcare, unquestionable business integrity and the
enhancement of shareholder value. This combination with OrNda will further
these goals.
"The strategic and geographic match are perfect," Barbakow continued.
"Thirty-two of OrNda's 50 hospitals are a solid fit with existing Tenet
networks. Also, OrNda meshes very well with us culturally. During recent
months we have come to know OrNda well and we've been impressed with their
hospitals and their corporate and operating management. Their facilities and
their pool of talent will be of great benefit to Tenet. Together, we believe we
will be particularly attractive to other hospitals and health systems seeking
partners to enhance their strategic futures."
The combination of the two companies is expected to result in approximately
$70 million in annual cost savings, interest reductions and operating synergies
following the first full fiscal year of combined operations.
Barbakow, 52, will continue as chairman and chief executive officer of the
combined company and Michael H. Focht Sr., 54, will continue as president and
chief operating officer. Charles N. Martin Jr., 53, OrNda's chairman, president
and chief executive officer, will become Tenet's vice chairman and will be a
member of the executive committee of the company's board
-more-
of directors. He will also serve as a member of the company's management
committee.
Tenet's board of directors will be expanded from 11 members to 14 to
welcome Martin and two OrNda board members, Paul S. Levy and Peter A. Joseph,
partners in the merchant banking firm of Joseph, Littlejohn & Levy, an affiliate
of which is OrNda's largest shareholder.
"Five years ago, OrNda was a collection of 11 hospitals with less than $500
million in revenue," said Martin. "Today, we have 50 hospitals with pro forma
revenues of approximately $2.7 billion. Just this year we have substantially
transformed this company in terms of the size and quality of our operations.
This merger creates a large, strong competitor with tremendous momentum and no
constraints on its ability to grow."
The acquisition will enhance Tenet's competitive presence in Southern
California, South Florida, Dallas and Houston. In addition, it will give the
company entry into other attractive regions such as the Northwest, New England,
Arizona and Nevada.
In sprawling Southern California, the transaction more than doubles Tenet's
holdings from 13 hospitals to 29. Pending transactions previously announced by
OrNda would increase the count to 31.
"We will be the largest integrated provider system in Southern California
and the only one with a full geographical representation," said Barbakow. "This
will allow us to work with payors of all types - both private and governmental -
across all of Southern California for the delivery of efficient healthcare
services."
In South Florida, the transaction further enhances Tenet's strong
integrated delivery system by increasing its acute care hospitals from seven to
11 and expanding the network's geographic reach south to Miami and into Coral
Gables. Tenet's pending transaction previously
-more-
announced would increase the number of hospitals to 12.
Key OrNda shareholders representing approximately 14 percent of OrNda's
shares outstanding have agreed to vote in favor of the transaction.
The companies hope to close the transaction in early March 1997. It is
subject to approval of shareholders of both companies, review under the Hart-
Scott-Rodino Antitrust Improvements Act and other customary regulatory
approvals.
Under the terms of the agreement, Tenet or OrNda is each entitled, under
certain circumstances, to receive a termination fee of $50 million from the
other in the event the merger is not completed. In addition, Tenet has granted
OrNda an option to purchase approximately 10.5 percent of its common stock and
OrNda has granted Tenet an option to purchase 19.9 percent of its common stock
under certain circumstances.
Donaldson, Lufkin & Jenrette Securities Corporation is serving as financial
advisor to Tenet. Merrill Lynch & Co. is serving as financial advisor to OrNda.
OrNda HealthCorp, based in Nashville, Tenn., is the third largest investor-
owned hospital management company in the United States. It is a leading
provider of healthcare services, delivering a broad range of inpatient and
outpatient healthcare services principally through the operation of 50 acute
care hospitals located in urban and suburban communities in 15 states.
Tenet, based in Santa Barbara, Calif., is the second-largest investor-owned
healthcare company in the U.S., generating more than $5.5 billion in annual net
operating revenues. Through its subsidiaries, Tenet owns and operates 76 acute
care hospitals and related businesses in 13 states.
###
Listed: Tenet: NYSE, PSE(THC)
OrNda: NYSE(ORN)
TENET & ORNDA ACUTE CARE PROPERTIES
STATE NAME LOCATION BEDS
- ----- ---- -------- ----
Alabama Brookwood Medical Center Birmingham 586
Lloyd Noland Hospital & Health System Fairfield 319
Arizona Community Hospital Medical Center Phoenix 59
Mesa General Hospital Medical Center Mesa 125
St. Luke's Behavioral Health Center Phoenix 86
St. Luke's Medical Center Phoenix 221
Tempe St. Luke's Hospital Tempe 110
Tucson General Hospital Tucson 146
Arkansas Central Arkansas Hospital Searcy 193
Methodist Hospital of Jonesboro Jonesboro 104
National Park Medical Center Hot Springs 166
Saint Mary's Regional Med. Center Russellville 170
California Alvarado Hospital Medical Center San Diego 231
Brotman Medical Center Culver City 495
Centinela Hospital Medical Center Inglewood 400
Century City Hospital Los Angeles 190
Chapman Medical Center Orange 104
Coastal Communities Hospital Santa Ana 177
Community Hospital of Huntington Park Huntington Park 99
Community Hospital of Los Gatos Los Gatos 164
Doctors Hospital of Manteca Manteca 73
Doctors Hospital of Pinole Pinole 137
Doctors Medical Center Hospital of
Modesto Modesto 433
Encino-Tarzana Reg. Medical Center Encino 151
Encino-Tarzana Reg. Medical Center Tarzana 231
Fountain Valley Regional Hospital
& Med. Ctr. Fountain Valley 413
French Hospital Medical Center San Luis Obispo 147
Garden Grove Hospital & Med. Ctr. Garden Grove 167
Garfield Medical Center Monterey Park 211
Greater El Monte Community Hospital South El Monte 113
Harbor View Medical Center San Diego 156
Irvine Medical Center Irvine 176
John F. Kennedy Memorial Hospital Indio 130
Lakewood Regional Medical Center Lakewood 175
Los Alamitos Medical Center Los Alamitos 173
Midway Hospital Medical Center Los Angeles 225
Mission Hospital of Huntington Park Huntington Park 127
Monterey Park Hospital Monterey Park 102
North Hollywood Medical Center North Hollywood 160
Placentia Linda Hospital Placentia 114
Redding Medical Center Redding 185
San Dimas Community Hospital San Dimas 99
San Ramon Regional Medical Center San Ramon 123
Santa Ana Hospital Medical Center Santa Ana 90
Sierra Vista Regional Medical Center San Luis Obispo 195
South Bay Medical Center Redondo Beach 201
St. Luke Medical Center Pasadena 172
Suburban Medical Center Paramount 184
Twin Cities Community Hospital Templeton 84
USC University Hospital Los Angeles 286
Valley Community Hospital Santa Maria 70
Westside Hospital Los Angeles 66
Whittier Hospital Medical Center Whittier 159
Woodruff Community Hospital Long Beach 96
Page 1, October 18, 1996
Florida Coral Gables Hospital Coral Gables 285
Delray Community Hospital Delray Beach 211
Florida Medical Center Fort Lauderdale 459
Florida Medical Center, South Plantation 222
Hialeah Hospital Hialeah 378
Hollywood Medical Center Hollywood 334
Memorial Hospital of Tampa Tampa 174
North Bay Medical Center New Port Richey 122
North Ridge Medical Center Ft. Lauderdale 391
Palm Beach Gardens Medical Center Palm Beach Gardens 204
Palmetto General Hospital Hialeah 360
Palms of Pasadena Hospital St. Petersburg 310
Parkway Regional Medical Center North Miami 764
Seven Rivers Community Hospital Crystal River 128
Town & Country Hospital Tampa 201
West Boca Medical Center Boca Raton 185
Georgia North Fulton Regional Hospital Roswell 167
Spalding Regional Hospital Griffin 160
Indiana Culver Union Hospital Crawfordsville 120
Winona Memorial Hospital Indianapolis 365
Iowa Davenport Medical Center Davenport 150
Louisiana Doctors Hospital of Jefferson Metairie 138
Kenner Regional Medical Center Kenner 300
Meadowcrest Hospital Gretna 200
Memorial Medical Center Mercy Campus New Orleans 272
Memorial Medical Center Baptist Campus New Orleans 487
Minden Medical Center Minden 121
NorthShore Reg. Medical Center Slidell 174
St. Charles General Hospital New Orleans 173
Massachusetts Saint Vincent Hospital Worcester 432
Mississippi Gulf Coast Medical Center Biloxi 189
Missouri Columbia Regional Hospital Columbia 265
Kirksville Osteopathic Medical Center Kirksville 119
Lucy Lee Healthcare System Poplar Bluff 201
Lutheran Medical Center St. Louis 408
Twin Rivers Regional Medical Center Kennett 116
Nebraska Saint Joseph Hospital Omaha 374
Nevada Lake Meade Hospital Medical Center North Las Vegas 198
North Central Carolina Hospital Sanford 137
Carolina Frye Regional Medical Center Hickory 355
Oregon Eastmoreland Hospital Portland 100
Woodland Park Hospital Portland 209
South East Cooper Regional Medical Center Mt. Pleasant 100
Carolina Hilton Head Medical Center and Clinics Hilton Head 68
Piedmont Healthcare System Rock Hill 268
Tennessee Harton Regional Medical Center Tullahoma 137
Medical Center of Manchester Manchester 49
Saint Francis Hospital Memphis 890
University Medical Center Lebanon 260
Page 2, October 18, 1996
Texas Brownsville Medical Center Brownsville 177
Cypress Fairbanks Medical Center Houston 143
Doctors Hospital of Dallas Dallas 268
Garland Community Hospital Garland 113
Houston Northwest Medical Center Houston 494
Lake Pointe Medical Center Rowlett 92
Mid-Jefferson Hospital Nederland 138
Nacogdoches Medical Center Nacogdoches 150
Odessa Regional Hospital Odessa 100
Park Place Medical Center Port Arthur 236
Park Plaza Hospital Houston 468
Providence Memorial Hospital El Paso 471
RHD Memorial Medical Center Dallas 190
Sharpstown General Hospital Houston 190
Sierra Medical Center El Paso 365
South Park Hospital & Medical Center Lubbock 101
Southwest General Hospital San Antonio 286
Trinity Medical Center Carrollton 149
Trinity Valley Medical Center Palestine 126
Twelve Oaks Hospital Houston 336
Washington Puget Sound Hospital Tacoma 160
West Virginia Plateau Medical Center Oak Hill 91
Wyoming Lander Valley Medical Center Lander 102