Heller Financial Inc. said Monday that it has agreed to buy HealthCare Financial Partners Inc. for $483 million in cash and stock.
The purchase would give Chicago-based Heller a foothold in the middle- market health-care lending sector.
HealthCare Financial would have about $900 million of loan commitments, including Heller's in the sector, and operate as a separate business unit. The acquisition is scheduled to close in July.
Robert Napoli, an equity analyst with ABN Amro in Chicago, praised the deal for its price and timing. HealthCare Financial, based in Chevy Chase, Md., went public in 1996 at $10 a share and has been trading in the low $20 range. The price Heller would pay, about $35 a share, includes a "fair" premium, he said.
The target is known for expertise in health-care finance, which has inflicted a high level of defaults on banks in the last year.
"It's an excellent time to get into the business," Mr. Napoli said. "The banks have pulled back on financing health-care companies. If you're not an expert it's a confusing market."
HealthCare Financial's book value is about $18 a share, or $255 million. Its share price peaked in July at more than $60.
The current price is more in line with the company's strong, steady, strong growth, Mr. Napoli said. "The stock got a little carried away" in early 1998, he said. "It looked less like a finance company and more like an Internet company."
Mr. Napoli said the deal would boost the value of both companies, mostly because Heller offers a big balance sheet from which HealthCare Financial can expand its business.
Heller reported first-quarter earnings Monday of $57 million, 19% more than a year earlier.