- The merger between Spectrum Health and Beaumont Health is now expected to close later than anticipated as a review by the Federal Trade Commission is taking longer due to a surge in merger filings, the two systems said.
- The deal was expected to be completed by the fall pending regulatory review, but a spokesperson said that it's now likely to be complete "beyond the fall."
- The systems are responding to the FTC's requests for additional information, according to the joint statement.
The FTC previously sounded the alarm over a "tidal wave" of merger filings across all industries. The agency began sending warning letters to companies about the situation this summer.
"Companies that choose to proceed with transactions that have not been fully investigated are doing so at their own risk," the regulator said in an earlier statement.
In August, 369 merger filings had been submitted to the FTC, a significant leap from the 182 last August.
Deals above a certain threshold, currently $92 million, require companies to alert the FTC and DOJ in advance. It then triggers a 30-day review period in which the agencies may determine whether the deal is unlawful. After asking for more information, the agencies then have a limited time window to challenge the deal after receiving all the relevant information.
The FTC warned that if the parties do not hear back from the FTC within certain timeframes, that the parties should not assume the deal has been given the green light.
"Any inaction by the Commission before the expiration of the waiting period should not be construed as a determination regarding the lawfulness of the transaction," the FTC said in the warning letters it has sent to companies. The FTC reminded companies that they have the right to challenge deals before or after they close.
It seems Beaumont and Spectrum may be heeding this advice. In light of the FTC's warning, and with the Biden administration's latest promise to crack down on hospital mergers, operators may be proceeding with caution when it comes to M&A as it can be costly and complex to unwind deals.
The two said they are "currently responding to a request for additional information from the FTC."
Though it's unclear how long the deal will be delayed, a spokesperson said via email that the expectation is now "beyond the fall."
If combined, the two will have a dominant presence in the state of Michigan, with a total of 22 hospitals, a sizable outpatient business and a health plan that covers 1 million Michiganders.
Spectrum Health's 14 hospitals dot the western side of the state while Beaumont's eight hospitals hug the Detroit area on the opposite side of the state.