AmSurg Bids for Team Health Holdings
October 20 2015 - 7:20AM
Dow Jones News
AmSurg Corp., a provider of outsourced physician services to
hospitals and others, is seeking to combine with Team Health
Holdings Inc. in an effort to gain scale amid a wave of
consolidation in the health-care industry.
In an Oct. 12 letter to Team Health's board, AmSurg Chief
Executive Christopher Holden proposed a stock-and-cash merger of
the companies that would currently value Team Health at $71.47 a
share, or more than $5 billion. Shareholders of Team Health would
receive $11.49 a share in cash, according to a copy of the letter
that was viewed by The Wall Street Journal.
The per-share price would represent a premium of 36% over
Knoxville, Tenn.-based Team Health's closing price of $52.50
Monday.
Team Health, which is seeking to complete an acquisition it
announced in August, rebuffed the offer, according to people
familiar with the matter. AmSurg, of Nashville, Tenn., now plans to
go public with the offer in an effort to put pressure on Team
Health to negotiate a deal. There is significant shareholder
overlap between the two companies, which could aid in that effort,
the people said.
Team Health officials couldn't immediately be reached for
comment.
The combined company's ownership would be split 50-50 between
the two sets of shareholders.
Each company currently has a market capitalization of about $3.8
billion, and combining them would create a major national provider
of outsourced physician services, with a network of more than 1,200
hospitals and about 20,000 doctors. It would have a big presence in
areas including anesthesia, emergency services, radiology and
neonatology. AmSurg is a big player in so-called ambulatory
surgery, with roughly 250 facilities that perform procedures that
don't require an overnight stay.
Consolidation waves have swept through both the hospital and
health-insurance industries, part of a broader surge in deal making
in health-care and other sectors of the economy in recent years.
That has put pressure on companies like AmSurg to seek tie ups that
will enable them to maintain the size and scope they need to keep
up with customers, rivals and suppliers.
AmSurg expects that a combination with Team Health—which the
resulting company would be named—would generate $200 million to
$290 million in annual synergies, both from cost reductions and
revenue enhancements.
Team Health in August agreed to buy another outsourced-services
provider, IPC Healthcare Inc., for about $1.4 billion.
AmSurg is in favor of the deal and wants Team Health to complete
it, but believes that financing it as part of a broader three-way
merger could save between $100 million and $150 million because
otherwise debt for the IPC deal would need to be refinanced, the
people said.
"If you were not to engage with us now in a collaborative way,
it could possibly sub-optimize the capital structure of a
combination with AmSurg in the future—or worse—result in the loss
of this opportunity completely," the letter reads.
AmSurg believes that experience it gained from buying Sheridan
Healthcare Inc. for about $2.3 billion 2014 would help it
successfully meld the three companies, according to the letter.
Write to Dana Cimilluca at dana.cimilluca@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 20, 2015 07:05 ET (11:05 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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