Physician-staffing giant TeamHealth has agreed to be purchased by affiliates of the Blackstone Group for $6.1 billion.
Blackstone, one of the nation's largest private equity groups, intends to pay $43.50 per share for TeamHealth, which changed its CEO last month in light of slumping earnings and stock price.
The Blackstone price is an 18% premium above TeamHealth's Friday closing stock price of $36.85.
Hedge fund Jana Partners has pledged to sell its nearly 8% stake in TeamHealth as part of the deal. Early this year, Jana fought for and won three board seats at TeamHealth after criticizing management and the board of directors for strategic missteps in guiding the company. Jana is TeamHealth's third-largest shareholder. The largest is Wellington Management with 7.1 million, or 9.8%, of the outstanding shares. Fidelity Management & Research is next at 6.7 million share, or 9.1%.
The board takeover resulted in TeamHealth in September replacing longtime CEO Michael Snow with former LifePoint Health Chief Financial Officer Leif Murphy.
"We are pleased to reach this agreement with Blackstone, which maximizes value for all TeamHealth stockholders," Murphy said in a release.
Blackstone executives said they were looking forward to taking TeamHealth through its next phase of growth.
"TeamHealth has built an industry-leading physician-services platform that is ideally positioned to enable its hospital partners and clinicians to navigate the evolving healthcare landscape while providing outstanding service to its patient,” said Bruce McEvoy, a senior managing director at Blackstone.
The merger agreement includes a "go-shop" period. That means TeamHealth and its board of directors may evaluate and potentially enter negotiations with parties that offer alternative proposals during a 40-day period following the execution date of the definitive agreement.
Knoxville, Tenn.-based TeamHealth is soon to be surpassed as the nation's largest physician-staffing company for hospitals when AmSurg and Envision Healthcare complete a merger in November.
TeamHealth posted net income in its second quarter of $18.8 million, or $0.25 diluted net earnings per share, compared with net earnings of $28.9 million, or $0.39 diluted net earnings per share, in the second quarter of 2015.
Revenue in the second quarter was $1.12 billion, a 28% increase over the year-earlier quarter. TeamHealth said the increase was largely the result of the $1.6 billion acquisition of IPC Healthcare late last year.
In contrast, the merger between AmSurg and Envision, scheduled to be completed in November, will create a physician-staffing giant with combined revenue of about $8.5 billion compared with TeamHealth's less than $5 billion in annual sales.
TeamHealth drew investor ire in late 2015 when management and the board rejected a $5 billion merger offer from rival AmSurg.
At the time, TeamHealth's stock price was trading about $60 per share.
As earnings declined, the company's depressed stock price drew in Jana and led to the replacement of Snow as CEO.
TeamHealth's board of directors is recommending that stockholders approve the agreement, the company said in its release. TeamHealth is sending the proxy statement of the deal to stockholders so a vote can be held at a special meeting of stockholders "as soon as practicable."