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Federal Street Acquisition amends proposed $1.74B merger with Agiliti Health


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Federal Street Acquisition amends proposed $1.74B merger with Agiliti Health

Federal Street Acquisition Corp. amended the terms of its merger deal with Agiliti Health Inc., formerly known as Universal Hospital Services Inc., at a combined enterprise value of about $1.74 billion.

Under the amended deal, the total consideration to be paid to the selling equity holders of Agiliti Health's holding company, Agiliti Holdco Inc., was reduced to about $1.44 billion from about $1.58 billion. The reduced consideration effectively reflects stock consideration in Agiliti Inc. that the selling equity holders were willing to waive to ensure that the deal may proceed.

Among other things, the amended deal also provides that the consideration will now be payable solely in cash instead of a combination of cash and common stock, except for the rollover by Agiliti Holdco option holders of a portion of their equity interests, and that Agiliti Holdco will not exercise its right to terminate the agreement before Jan. 9, 2019.

Additionally, Federal Street amended its subscription agreement with an affiliate of middle-market private equity firm Thomas H. Lee Partners LP. The revised subscription deal, which includes backstop financing for the amended merger transaction in the event of redemptions by Federal Street's public shareholders, provides that Federal Street common shares will be purchased at a price of $8.50 per share, or up to $750 million in the aggregate.

The special meeting to vote on the transaction will be reconvened at 10 a.m. ET on Jan. 3, 2019. The deadline for Federal Street's public shareholders to elect to redeem their class A common shares was extended to 5 p.m. ET on Dec. 31.

Agiliti Health, a portfolio company of private equity firm Irving Place Capital Management LP, is a U.S. provider of healthcare technology management and service solutions. Federal Street is a special-purpose acquisition company sponsored by an affiliate of Thomas H. Lee Partners.

Citigroup Global Markets Inc. and Bank of America Merrill Lynch are the financial advisers and Kirkland & Ellis LLP is the legal adviser to Federal Street, while Weil Gotshal & Manges LLP is the legal adviser to Agiliti Health and Irving Place on the deal.