HCA Sold for $33 billion; Largest Leveraged Buyout Ever

HCA, a leading health care services company, and Bain Capital, Kohlberg Kravis Roberts & Co., and Merrill Lynch Global Private Equity announced today the execution of a definitive merger agreement under which affiliates of the private equity sponsors and HCA Founder Dr. Thomas F. Frist, Jr. will acquire HCA in a transaction valued at approximately $33 billion, including the assumption or repayment of approximately $11.7 billion of debt.

Under the terms of the agreement, HCA stockholders will receive $51 in cash for each share of HCA common stock they hold, representing a premium of approximately 18% to HCA’s closing share price on July 18, 2006, the last trading day prior to press reports of rumors regarding a potential acquisition of HCA.

The board of directors of HCA, on the unanimous recommendation of a special committee comprised entirely of disinterested directors, has approved the merger agreement and has resolved to recommend that HCA’s stockholders adopt the agreement.

In the event the transaction closes, members of HCA’s senior management team have also agreed to reinvest a portion of their HCA equity into the acquiring entity or an affiliate thereof. Dr. Thomas Frist, Jr. and certain related persons have reached agreements to vote their shares in favor of the transaction.

Jack O. Bovender, Jr., HCA Chairman and CEO, said, “After careful analysis, the special committee and the board have endorsed this transaction as being in the best interests of our shareholders. We are very pleased to have an experienced group of investors who are committed to maintaining our company’s culture of a patients-first approach to high quality, compassionate care. They are also committed to the welfare of our colleagues across the company who carry out that mission every day. These are the principles on which HCA was founded.”

Pending the receipt of stockholder approval and expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as well as satisfaction of other customary closing conditions, the transaction is expected to be completed in the fourth quarter of 2006. The transaction will be financed through a combination of equity contributed by the private equity consortium, Dr. Thomas Frist, Jr., and members of management, and debt financing that has been committed by Bank of America, Citigroup Global Markets, JPMorgan, and Merrill Lynch Capital Corporation, subject to customary conditions.

There is no financing condition to the obligations of the private equity consortium to consummate the transaction.

Under the merger agreement, HCA may solicit superior proposals from third parties during the next 50 days. In accordance with the agreement, the board of directors of HCA, through its special committee and with the assistance of its independent advisors, intends to actively solicit superior proposals during this period. HCA advises that there can be no assurance that the solicitation of superior proposals will result in an alternative transaction. HCA does not intend to disclose developments with respect to the solicitation process unless and until its board of directors has made a decision.

“This is a truly landmark deal, and we are pleased to partner with the management team led by Jack Bovender, Dr. Thomas Frist, Jr. and our fellow equity sponsors,” said Stephen Pagliuca, a Managing Director at Bain Capital. “HCA is the largest and most sophisticated operator in the U.S. hospital industry, delivering high quality and cost effective healthcare as well as a track record of consistent growth. We look forward to putting our extensive healthcare experience to work in order to support management in growing this outstanding company.”

Michael Michelson, a Member of KKR, stated, “HCA provides world class patient care on a unique scale in this country and is an indispensable part of the communities it serves. We are delighted to be joining with HCA’s talented management, Dr. Thomas Frist, Jr., and our private equity partners to continue to build the company’s franchise of high quality clinical care. KKR’s experienced healthcare team looks forward to providing strong support for HCA’s future growth, including continuing to invest substantial capital in its facilities.”

Dr. Thomas Frist, Jr. said of the pending transaction, “This transaction will position the company to continue its tradition of high-quality service provided with genuine caring. In addition, the transaction will position the company and its employees for sustained future success.”

Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. Incorporated are acting as financial advisors to the special committee. Credit Suisse and Morgan Stanley have each delivered a fairness opinion to the special committee. Shearman & Sterling LLP is acting as legal advisor for the special committee and Bass Berry & Sims PLC is acting as legal advisor for HCA.

Merrill Lynch & Co. acted as lead M&A advisor, and Banc of America Securities LLC, Citigroup Global Markets, and JPMorgan acted as M&A advisors, to the private equity consortium. Simpson Thacher & Bartlett LLP is acting as legal advisor to the private equity consortium.

The transaction does not require the consent of the Company’s unsecured noteholders. It is currently intended that substantially all of the Company’s 8.850% Medium Term Notes due 2007, 7.000% Notes due 2007, 7.250% Notes due 2008, 5.250% Notes due 2008 and 5.500% Notes due 2009 (or an equivalent amount of the Company’s other existing notes) will either be tendered for or repaid. The transaction is not, however, conditioned upon any such tender or repayment. The Company’s remaining unsecured notes are expected to remain outstanding and will not be equally and ratably secured with the new debt raised to finance the transaction.