What: Shares of Team Health Holdings (NYSE:TMH), a healthcare-focused staffing company, were up more than 15% in early trading today after the firm received a proposed merger offer from rival healthcare staffing firm AmSurg Corp (NASDAQ:AMSG).
So what: AmSurg has proposed to merge with Team Health to create a new company that would result in a 50/50 ownership position for current Team Health and AmSurg shareholders. Through a combination of cash and stock, AmSurg has offered Team Health shareholders $71.47 per share, which represents a 36% premium to yesterday's closing price.
AmSurg believes that by combining the two companies it could realize between $200 million to $290 million in synergies, and AmSurg wants the new company to take the TeamHealth name.
If the deal is accepted, AmSurg's current Chief Executive Officer Christopher Holden would take the top seat and executives from both companies would combine to make up the rest of top management. The newly created company would have an enterprise value around $7.8 billion.
Now what: While the deal was only announced publicly this morning, AmSurg had apparently approached Team Health with a proposal to combine companies last month, but that proposal was quickly rejected, as Team Health's management felt that even with the premium the offer still undervalued the company.
Team Health has once again acted quickly and has already announced that they are rejecting this new merger proposal.
At this point, it is unknown if AmSurg will consider raising its offering price to make the deal more attractive to Team Health shareholders, so if you are a shareholder in either company it's probably best to sit tight and watch as this story plays out.
Brian Feroldi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.