By Mike Boyer
The Cincinnati Enquirer

Cincinnati's Roto-Rooter Inc., North America's largest plumbing and drain-cleaning provider, is now the nation's largest provider of care to the terminally ill.

Roto-Rooter, which changed its name from Chemed Corp. last year˝ completed its acquisition Tuesday of the 63 percent of Vitas Healthcare Corp. that it didn't already own for $410.7 million.

Roto-Rooter has indicated it might eventually spin off all or part of Miami-based hospice provider Vitas in a public offering. It said the price included refinancing of Vitas' debt and other payments.

Roto-Rooter paid $30 a share in cash, or $314 million, for all the stock in Vitas it didn't already hold. It also repaid $67.3 million of Vitas' debt and $29.4 million of its own debt.

It paid retiring Vitas founder Hugh A. Westbrook a $25 million noncompete and consulting fee, with severance payments of $2.3 million to two other Vitas officers.

Roto-Rooter said it funded the Vitas purchase with the private placement of 2 million Roto-Rooter shares priced at $50 each.

It also secured through Banc One a $100 million revolving credit facility and $35 million term loan maturing in five years.

In addition, Roto-Rooter issued $110 million in floating notes maturing in six years and $150 million in fixed-rate notes maturing in seven years.

Timothy O'Toole, Roto-Rooter executive vice president and treasurer, succeeds Westbrook as CEO.

Shares of Roto-Rooter rose as high as $66.95 from the $35.28 where they stood the day before the deal was announced Dec. 19. Tuesday, they fell $6.20, or 11 percent, closing at $52.50.

"The acquisition of Vitas will enable Roto-Rooter shareholders to realize the full benefit of an investment made more than a dozen years ago,'' said Kevin J. McNamara, Roto-Rooter president and CEO.

The acquisition will more than double Roto-Rooter's revenues.

Roto-Rooter also owns Service America, which does major appliance repair and warranty service. The company had a loss of $3.4 million on revenues of $309 million last year. For the fiscal year ending last September, privately held Vitas reported net income of $13.7 million on revenues of $420 million.

Vitas employs more than 6,100 caring for 8,000 terminally ill patients in the company's 18 centers, private homes and other operations. In Greater Cincinnati, Vitas employs 331 caring for about 500.

Roto-Rooter is no stranger to the health-care business. It formed Covington-based Omnicare Inc., a leading provider of pharmacy services to long-term-care centers, in 1981 and eventually spun off that business. It sold Omnia Group, a maker of medical and dental products, in 1997, and Patient Care Inc., a home health-care provider in the Northeast, in 2002.

E-mail mboyer@enquirer.com