CHICAGO — The board of the Detroit Medical Center voted to extend the deadline for its $1.5 billion acquisition by a for-profit Tennessee health care company to Dec. 31, saying the parties were still waiting for state regulatory approvals.
The deal is set to close Oct. 31. Michigan Attorney General Mike Cox, who is running for re-election, and the federal Centers for Medicare and Medicaid still need to approve the transaction, according to a DMC spokesman.
DMC officials said the review was taking longer than expected because of the complexities of the transaction. It is the second time the deal, first announced in March, has been delayed.
“Everyone involved is committed to getting this done quickly,” DMC board chairman Steve D’Arcy said in a statement. “We are absolutely confident this will be completed by the end of the year.”
The deal is important for the city of Detroit because the buyer, Vanguard Health System, said it would spend $800 million on capital projects on DMC’s Detroit-based facilities. It would be the largest private capital investment in the city’s history.
DMC owns eight hospitals, five of which are located in downtown Detroit. Under the terms of the transaction, Vanguard would pay $417 million for DMC, pay to defease $500 million of outstanding bonds, and fund $278 million in pension obligations. Vanguard agreed to spend $850 million in capital improvements.
DMC and Vanguard also announced this week that they would form a joint partnership and split costs on the first $1 million to launch the groundbreaking of a new children’s specialty center. Officials said the new center needs to break ground before winter to be completed as scheduled in January 2012.