AdaptHealth Corp. (NasdaqCM:AHCO) entered into a definitive agreement to acquire AeroCare Holdings, Inc. from Peloton Equity, LLC, SkyKnight Capital, L.P., SV Health Investors, LLC and AeroCare Holdings management and employees for $2 billion on a debt-free and cash-free basis on December 1, 2020. Under the terms of the transaction, AdaptHealth will pay a cash consideration of $1.1 billion, subject to adjustment as provided in the definitive agreement, and 31 million shares of AdaptHealth common stock. The share consideration will initially be a combination of class A common stock (up to 19.9% of the outstanding class A common stock) and non-voting convertible preferred, which converts to class A common stock once AdaptHealth shareholders approve the issuance of the share consideration under NASDAQ rules. AdaptHealth will acquire common shares and Series C preferred stock of AeroCare Holdings. AdaptHealth intends to fund the cash portion of the consideration and associated costs through incremental debt and has committed debt financing. Jefferies Finance committed to provide a senior secured term loan B facility in an aggregate principal amount of up to $900 million and a senior unsecured bridge facility in an aggregate principal amount of up to $450 million finance the transaction. AdaptHealth funded the transaction and associated costs through a combination of the proceeds received from its previously completed $500 million unsecured senior notes issuance and a refinancing of, and increase to its existing senior secured credit facilities, plus cash on hand which includes a portion of the proceeds received from its January 2021 equity offering. The adjustment escrow deposit amount of $10 million and special escrow deposit amount of $7 million deliver to the escrow agent, in separate and segregated accounts, held, safeguarded, invested and released pursuant to the terms of this agreement and the escrow agreement. As of December 14, 2020, AdaptHealth LLC, a subsidiary of AdaptHealth Corp., has commenced, subject to market and other conditions, an offering of $500 million aggregate principal amount of senior notes due 2029. The net proceeds from the offering, together with term loan borrowings and cash on hand, will be used to finance the cash portion of the consideration for the acquisition and to pay related fees and expenses. The gross proceeds from the offering will replace the outstanding bridge commitment the issuer has in place with Jefferies Finance in connection with funding the acquisition. As of January 6, 2021 AdaptHealth plans to raise $239.25 million in a public stock offering from which some will be used to fund the acquisition. Upon completion, AeroCare will operate as a corporate subsidiary of AdaptHealth. The combined company will operate under the name AdaptHealth. In case of termination, AdaptHealth and AeroCare Holdings will pay a termination fee of $60 million. AeroCare reported total assets of $496.94 million and total stockholders' deficit of $129.14 million as on September 30, 2020. Luke McGee, Chief Executive Officer of AdaptHealth, Stephen Griggs and Steve Griggs, Chief Executive Officer of AeroCare, will jointly lead the combined company as Co-Chief Executive Officers. Josh Parnes will continue to serve as President and Jason Clemens will be Chief Financial Officer of AdaptHealth. In addition, AdaptHealth will expand its Board of Directors at closing of the transaction to 11 Directors, with Steve Griggs and shareholder designee, Ted Lundberg of Peloton Equity to join the Board. The transaction is subject to certain customary closing conditions and regulatory approvals, including expiration or termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended and Nasdaq completing its review of a “Listing of Additional Shares Notification Form” for listing of the any share consideration on the Nasdaq and no more than 3.5% of the shares of AeroCare's common stock issued and outstanding immediately prior to the first effective time shall consist of dissenting shares. The transaction was unanimously approved by the Boards of AdaptHealth and AeroCare. As of December 21, 2020 FTC granted early termination notice. The transaction is expected to close in the first quarter of 2021. The transaction is expected to financially accretive to growth, earnings, and cash flow. Jefferies LLC and Truist Securities, Inc. acted as financial advisors to AdaptHealth. Michael E. Brandt, Danielle Scalzo, Jason Pearl, Christopher Peters, and Jordan Messinger of Willkie Farr & Gallagher LLP and K&L Gates LLP acted as legal advisors to AdaptHealth. Morgan Stanley & Co. LLC acted as AeroCare’s financial advisor whereas Stuart L. Rosenthal, Matthew M. Mauney, Milena E. Tantcheva and James P.C. Barri of Goodwin Procter LLP acted as legal advisors for AeroCare Holdings and Peloton Equity. Brown & Fortunato, P.C. acted as legal advisor for AeroCare. Ann Beth Stebbins of Skadden Arps Slate Meager & Flom acted as legal advisor to Jefferies. AlixPartners acted as legal advisor to AdaptHealth. Berkeley Research Group, LLC acted as consultant and KPMG LLP acted as accountant to AdaptHealth. Skadden acted as legal advisor to Jefferies LLC.