LifePoint Hospitals Inc. and Province Healthcare Co. jointly announced Monday that LifePoint would acquire Province for $1.7 billion in cash, stock and assumption of debt.

Vaughan Regional Medical Center is one of 21 hospitals owned by Province in 13 states, and the only one located in Alabama.

According to The Associated Press shares of LifePoint fell more than 15 percent while Province shares increased more than 41 percent, following release of the news of the acquisition on Monday.

The transaction is expected to close in the first half of 2005 and is contingent upon approval of each company’s stockholders, required regulatory approvals, receipt of necessary financing and other conditions.

LifePoint expects savings in operations

of $15-18 million over the next two years, and an increase in earnings of 3.5 percent in 2005.

LifePoint owns 29 hospitals in nine states, including four in Alabama located in Andalusia, Haleyville, Russellville and Winfield.

Both hospital chains specialize in the non-urban hospital market.

The combined company

will have 50 hospitals. Combined beds were 5,285 in 2003 and combined revenues were $1.7 billion, according to a news release issued by the two companies.

Of the combined 50 hospitals, 47 will be in markets where LifePoint Hospitals will be the sole community hospital provider, it stated.

The businesses will be combined under a newly formed company.

Both companies are headquartered in Brentwood, Tenn., a suburb of Nashville.

While Province shareholders will receive a 66 percent premium on Province shares, owners of LifePoint Hospitals will pay approximately $564.4 million in cash and issue approximately 17.1 million shares of its common stock to Province Healthcare stockholders, who will own approximately 30 percent of the combined company’s equity. Each LifePoint stockholder will receive one share of stock in the combined company for each share of LifePoint’s common stock.

Steve Mahan, Vaughan CEO, expects no changes locally as a result of the acquisition –

in philosophy, operations or personnel.

“Locally, it’s a good thing,” Mahan said. “Our employees who have selected Province stock in their 401k plans will realize a 66 percent premium for their Province Healthcare stock based on the closing price of a share of Province common stock on Aug. 13, of $13.61, the last trading day prior to acquisition.

“Second, the combined company will increase the ability to conduct capital investment formation.

“Third, the Province system, including Vaughan, will acquire a superior information technology system,” he said.

Mahan said that the operational

philosophy of the two corporations are very similar.

“The combined company

will be among the top seven for-profit chains in the United States, and Vaughan will be one of the top 10 hospitals in that combined system,” he said.

“This hospital (Vaughan) is doing very well and the management team is demonstrating an understanding of the market and getting good results,” he said.

Mahan said that the acquisition makes good sense. “They (the two companies) are

about the same size, their markets are similar but not overlapping,

and for LifePoint to remain competitive it had to grow,” he said.

LifePoint was established in May 1999 as a spin-off of HCA – The Healthcare Company. HCA, which once owned what is now Vaughan Regional Medical Center,

is the largest hospital chain in the United States.

LifePoint owns and operates general acute care hospitals located in growing non-urban areas, according to a company statement.

Kenneth C. Donahey is LifePoint chairman, president and CEO.

Province Healthcare also serves the non-urban market, according to a company statement, with the goal of providing strong, locally focused health care.

Province was founded in 1996 as Principal Hospital Company by Chicago-based investment firm Golder, Thoma, Cresseu Raunerr Inc. and Martin S. Rash, Province’s CEO. The company saw the opportunity to consolidate non-urban healthcare across the country and to improve the quality and types of healthcare services available in many communities.