The Law Office of Lynnette Ariathurai A Professional Corporation

Large hospital business merger requires regulator approval

When the structure of a business changes, it requires approval from various government agencies. This includes when companies plan to merge together in California or in any other state. One planned business merger between two hospitals has been moving steadily forward, although the approval of federal and state regulators is still pending.

The business merger between Advocate Health Care and NorthShore University HealthSystem would create a $6.8 billion hospital system with 16 hospital locations. The business merger deal is expected to be finalized in early 2015. The newly combined company would be one of the largest nonprofit health systems in the United States. The newly merged company would be managed by a board of directors with twelve members, six from each of the two hospital systems.

In order for the business merger to be finalized, it will need the approval of the Federal Trade Commission as well as state regulators. This will require the filing of the appropriate legal documents with these agencies. Regulators may end up giving the merger significant scrutiny since it could have wide-ranging effects on the local hospital marketplace.

It is also important to understand all legal implications of moving forward with a business merger, in California or in any other state. The terms of the transaction should be completely understood by all parties involved. Therefore, legal contracts and agreements governing the merger will need to be drafted correctly and with the proper legal language. Failure to have all of these aspects in place could lead to legal problems in the future.

Source: Chicago Tribune, "Advocate Health Care and NorthShore to merge", Peter Frost, Sept. 12, 2014

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