TeamHealth rejects AmSurg's $7.8B merger proposal

Wed Oct 28 10:03:36 PDT 2015

October 20, 2015

TeamHealth rejects AmSurg's $7.8B merger proposal 

 <http://www.modernhealthcare.com/article/20151020/NEWS/151029999?utm_source=modernhealthcare&utm_medium=email&utm_content=20151020-NEWS-151029999&utm_campaign=mh-alert> Modern Healthcare

By Adam Rubenfire

Nashville-based AmSurg Corp. announced Tuesday that it wants to merge with TeamHealth Holdings in a $7.8 billion stock-and-cash transaction that would create the largest physician ambulatory service in the country, but TeamHealth is not interested in the deal.

AmSurg and TeamHealth together would have a network of more than 1,200 healthcare facilities and approximately 20,000 clinicians, according to a news release announcing the proposed deal.

AmSurg operates ambulatory surgery centers and offers physician staffing, while TeamHealth is primarily a physician staffing company. AmSurg estimates that the two companies have less than 10% geographic overlap between their businesses.

Knoxville, Tenn.-based TeamHealth has so far resisted all of AmSurg's proposals, including Tuesday's public request. AmSurg released a letter sent to TeamHealth's board of directors after a Sept. 30 meeting.

"We are disappointed to learn that you chose not to engage with us based on what appears to be a very cursory analysis of our specific proposal and key deal terms. Our goal here is to ask you to reconsider," AmSurg CEO Christopher A. Holden wrote.

TeamHealth said in a statement Tuesday morning that the “unsolicited proposal” is the same proposal that its board has previously rejected as not in the best interests of the company and its shareholders. The company reaffirmed its decision to turn down the proposal for a number of reasons, including the “insufficient value indicated in the AmSurg proposal” and “the execution risk of achieving that value.”

“We have great confidence in our ability to continue delivering value for TeamHealth stockholders and remain focused on realizing the benefits of our agreement with IPC Healthcare, which is on track to close in the fourth quarter," TeamHealth CEO Michael Snow said.

Holden said during a conference call Tuesday that TeamHealth turned down a new financing plan for the deal last week citing unfavorable timing with its recent acquisition of IPC Healthcare, a $1.6 billion deal that closed in August. TeamHealth rejected rumors at the time that it was pursuing that deal to fend off its own takeover.

"Why wait?" Holden said during the call. "We see no compelling reason to delay this opportunity to create substantial value for both company's shareholders."

AmSurg has taken the proposal public in an attempt to encourage TeamHealth's shareholders to push the company to merge, Holden said during a conference call.

The combined company would dominate the areas of ambulatory surgery, anesthesia, emergency services, hospitalists, neonatology and radiology.

“Our proposed combination will be transformational for both AmSurg and TeamHealth shareholders as well as for the physician services sector as a whole," said Holden, who proposes being CEO of the combined company.

Holden added that the combined company will have significantly enhanced free cash flow and expanded opportunities to accelerate growth. The market "demands but currently lacks a national and properly scaled physician services company," Holden said.

When asked by analysts on the call whether AmSurg may be taking the proposal public in light of other yet-to-be-disclosed deals on the table for TeamHealth, Holden said the company is "completely focused, ready and willing, and can't speculate" on other proposals.

Under the terms of the proposed merger, the combined company would assume the TeamHealth name, and TeamHealth would continue to operate out of its headquarters, according to the news release.

The board of directors would include representatives from AmSurg and TeamHealth. The brands of AmSurg and Sheridan, its anesthesia and neonatology brand, would be retained.

Jeff Wells
Deputy Editor, CAL/AAEM News Service

Brian Potts MD, MBA
Managing Editor, CAL/AAEM News Service

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