TeamHealth rejects $5.3bn AmSurg offer

Oct 20, 2015, 2:45 PM EDT
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TeamHealth rejected a $5.3 billion acquisition offer from AmSurg on Tuesday. AmSurg, which revealed on Tuesday that private merger talks with TeamHealth fell through in September, said it had gone public with the offer to persuade TeamHealth "to come back to the table," Reuters reports. TeamHealth, however, swiftly rejected the offer, saying it undervalued the company.

The cash-and-stock offer of $71.47 per share represents a premium of 36 percent to TeamHealth's closing price on Monday. AmSurg expects that synergies from the combination could eventually be worth an additional $9 to $10 per share for stockholders, AmSurg CEO Christopher Holden said in an interview with Reuters.

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, writes the Wall Street Journal. 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.

The combined company’s ownership would be split 50-50 between the two sets of shareholders. 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.