TeamHealth turns down $7.8 billion bid by AmSurg, says it's too low

TeamHealth rejected a $7.8 billion bid by ambulatory surgery giant AmSurg on Tuesday, saying the unsolicited bid undervalues the company.

The bid, which had been privately rejected by TeamHealth before AmSurg went public with the proposal on Tuesday, offered $71.47 per share for the company, which at the time was about 36 percent higher than share price. Since the announcement, TeamHealth's stock has jumped more than 20 percent.

According to TeamHealth, the company's directors said that the physician services company would prefer to go forward with its existing strategic plan, and it expects growth as a result of its recent acquisition of IPC Healthcare.

[Also: AmSurg offers $7.8 billion to merge with TeamHealth]

"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," said TeamHealth CEO Michael Snow in a statement.

TeamHealth also published the letter it sent to AmSurg CEO Christopher Holden on Oct. 15, when it initially rejected AmSurg's offer.

Here's the letter in its entirety:

AmSurg Corp.
lA Burton Hills Boulevard
Nashville, Tennessee 37215
Attn:     Christopher A. Holden
President and Chief Executive Officer

Dear Chris.

I am writing in response to your letter (and accompanying materials) dated October 12, 2015. TeamHealth's Board of Directors carefully reviewed and considered AmSurg's proposal with the assistance of our financial and legal advisors. Our Board concluded that AmSurg's proposal is not in the best interests of TeamHealth and its stockholders. Our conclusion was based on the insufficient value indicated in the proposal, the execution risk of achieving that value, and other key strategic factors noted below.

Our Board and management team are committed to executing our current strategic plan. We are extremely enthusiastic about our company's prospects and confident in our ability to grow value for our stockholders. The integration of IPC is a critical element of our plan and we will not compromise that effort. We commend your completion of the Sheridan acquisition, but as evidenced by our 35 year track record of successful acquisitions, we have ample expertise and resources to ensure the successful integration of IPC.

We agree with your observation that the physician services sector and the healthcare industry more generally are experiencing significant consolidation. While we can certainly understand why AmSurg would find a combination with TeamHealth appealing in such an environment, we are well positioned to independently seize advantageous transaction opportunities that may arise over time.

We appreciate the time and effort you committed to studying a combination with our company. However, we do not believe any purpose would be served by further discussions regarding your proposal.

Sincerely,

/s/ Michael Snow

Michael Snow
President and Chief Executive Officer

Twitter: @HenryPowderly