Blackstone acquires troubled TeamHealth for $6.1 billion

The Client

Blackstone is a premier global investment and advisory firm that strives to provide solutions that create lasting value for its investors, its portfolio companies and society at large. Founded in 1985, Blackstone has 22 offices worldwide. Blackstone’s combined portfolio companies employ more than 700,000 professionals and rank as the equivalent of number 7 on the Fortune 500. As a leader in alternative assessment management, Blackstone preserves and protects more than $190 billion in assets for public and corporate pension funds, academic, cultural and charitable organizations, among others. The firm’s diverse range of funds makes private equity, real estate, credit and hedge fund investments all over the world. Additional practices include a leading independent financial advisor business, handling highly complex and critical mergers and acquisitions, restructuring and reorganization assignments for corporate and government clients on a global scale, along with fund placement services to alternative investment managers.

TeamHealth was founded in 1979 to provide emergency department administrative and staffing services to two hospital clients that we proudly continue to serve today. After 30 years of geographic and service line expansion, TeamHealth is one of the nation's largest providers of hospital-based clinical outsourcing. Although we are a national organization, our operating philosophy is essentially the same as when we started 30 years ago. We are committed to a patient-centric model of healthcare delivery, with the hospital, physician group, and TeamHealth working collaboratively with our affiliated physicians so they can deliver compassionate, efficient, and safe patient care.

The Challenge

Blackstone Acquires Troubled Teamhealth For $6.1 Billion

TeamHealth Holdings, the healthcare outsourcing provider, finally agreed to be acquired by various funds belonging to the global asset manager Blackstone Group for $6.1 billion in a deal that also includes certain other co-investors and will be an all equity-cash deal. Under the specifics of the deal, Blackstone has also agreed to acquire the debt liabilities of TeamHealth, estimated to be around $2.47 billion in itself. It’s worth mentioning here that Team Health had recently spurned overtures by rival healthcare Amsurg, for a takeover bid of $5 billion, late last year. Amsurg later merged with another market player Envision Holdings, while TeamHealth later completed its acquisition of smaller rival IPC Healthcare Inc.

Stock prices TeamHealth rose sharply, registering a high of $42.25 in premarket trading, riding on the wave of the announcement that Blackstone would pay an 18% premium on the existing share price, $43.50 per share held, to be precise, to TeamHealth shareholders

There has been widespread consolidation including multiple mergers and acquisition among both listed and unlisted players, in the US healthcare outsourcing sectors recently. Market capitalization of several healthcare based services providers have taken a beating with rising administrative costs rising rapidly because of Obama’s Affordable Care Act.

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