Vestar Buying Radiation Therapy

NEW YORK (AP) — Shares of Radiation Therapy Services Inc., which operates radiation therapy centers, surged Monday following the announcement it will be bought by Vestar Capital Partners for $763.8 million.

The stock rose $9.40, or 43.6 percent, to close at $30.96 Monday. Shares have traded between $19.92 and $34.94 over the last 52 weeks.

On Friday, Radiation Therapy said it accepted Vestar's $32.50 per share offer. Including assumed debt, the deal is worth $1.1 billion. It is expected to close in the first quarter.

Deutsche Bank-North America analyst Pito Chickering increased his price target to $32.50 and downgraded the stock to “Hold” from “Buy” citing the buyout offer.

“This deal has a broad impact on our broader coverage,” he wrote in a note to investors. “There are several stocks that have been impacted negatively that we believe are still in demand.”

Despite reimbursement risks, he said, the health care sector will continue growing along with an aging population.

Meanwhile, Cowen and Co. analyst Kemp Dolliver said a competing bid is unlikely. He reaffirmed a “Neutral” rating.

The buyout price doesn't leave much room for competing offers, he said.

Banc of America analyst Gary Taylor raised his price target to $32.50, also saying a higher offer is unlikely.

“It (the deal) again tells us that if management is actively seeking to sell a company, don't bet against a deal,” he wrote in a note to investors. “It also tells us that sponsors are still willing to bake rebounding growth rates into their takeout valuations. In other words, liquidity exits and deals remain plausible for discounted stocks.”