04 November 2016

Blackstone to take TeamHealth private

Private equity giant Blackstone, alongside other co-investors, has agreed to purchase TeamHealth. With a bid price of USD 43.50 apiece, which represents a 32.6 per cent premium over TeamHealth’s close on 3rd October, the previous day before news of the deal was first reported, the acquisition can be valued at around USD 6,100 million including debt. As part of the board-approved transaction, TeamHealth has 40 days following the execution of the agreement to seek offers from other potential suitors.

The sellers, including fund managers Corvex Management, Jana Partners and Sachem Head Capital Management, are expected to offload their entire interests via the transaction. Approvals from shareholders and regulators are required before closing, which is scheduled to take place in the first quarter next year.

Listed on Nasdaq, TeamHealth provides various outsourced medical services, such as emergency and hospital treatment, to about 3,400 healthcare facilities in the US. The group hires over 19,000 clinicians who specialise in a wide range of practice areas, including acute care surgery, anaesthesiology, as well as obstetrics and gynaecology.

Prior to the Blackstone proposal, rival AmSurg last year sought to acquire TeamHealth at an implied price of USD 71.46 apiece, which fell short of the latter’s expectations. The ambulatory services provider subsequently upped its bid price, though it still failed to satisfy the target’s board, causing the deal to fall through. Later that year, TeamHealth went on to buy IPC Healthcare, a hospital services company, for around USD 1,600 million. Following its failed attempt to purchase TeamHealth, AmSurg instead turned to Envision Healthcare, another physician staffing company, with a takeover offer worth around USD 4,906 million. If all goes according to plan, the Envision Healthcare transaction will complete by the end of this year.

Other deals involving healthcare services targets completed this year include the takeover of Massachusetts-based Press Ganey, which conducts patient satisfaction surveys. EQT Partners, a private equity firm, bought the company for around USD 2,350 million last month with debt financing provided by Citigroup, Credit Suisse and Bank of America. In another eye-catching transaction, pharmaceutical wholesaler McKesson and clinical software developer Change Healthcare agreed in June to work together by establishing a joint venture worth USD 6,100 million. 

According to Reuters, the recent wave of consolidation that has swept through the physician services industry was partly triggered by the increasing administrative costs from President Obama’s Affordable Care Act.

Following the announcement of the Blackstone offer, TeamHealth’s shares surged 16.4 per cent to close at USD 42.85 on 31st October 2016.

TeamHealth has appointed Goldman Sachs and Citigroup as financial advisors to the deal, while Bank of America is assisting Blackstone.

© Zephyr