Ambulatory surgery center operator Amsurg Corp said it would buy Sheridan Healthcare Inc from private equity firm Hellman & Friedman LLC for about $2.35 billion in cash and stock to enter the outsourced physician services market.
Amsurg's stock jumped as much as 13 percent in early trading on the Nasdaq on Thursday.
Analysts lauded the "transformational" deal as it would be immediately accretive to Amsurg's earnings.
"This transaction will broaden Amsurg's hospital and health system relationships, while providing new avenues of growth and cash flow," Piper Jaffray analyst Kevin Ellich said in a note.
Amsurg, which runs 242 surgery centers in the United States, said the deal would help it outsource physicians for anesthesia, children's health, emergency medicine and radiology services.
Founded in 1962, Sheridan was acquired by Hellman & Friedman in 2007. It employs over 2,400 physicians and other healthcare professionals in 25 states.
The combined entity is expected to have 4,600 physician relationships across 38 states and cater to a $70 billion market, Amsurg said.
The company said it would pay about $615 million in stock and had secured financing from Citi, which is also its financial adviser for the deal.
The acquisition, expected to close in the third quarter of this year, will immediately add to Amsurg's adjusted earnings and cash flow, the company said.
Amsurg said it expected to realize annual synergies of $30 million-$40 million within three years.
The deal, which is estimated to add about 15 percent to Amsurg's adjusted earnings in its first year of integration, will give Hellman & Friedman a significant stake in the combined company.
"We assume Amsurg will be issuing about 14.3 million shares, making Hellman & Friedman an owner of 31 percent of the combined enterprise," Deutsche Bank analysts wrote in a note.
Florida-based Sheridan, which has been privately held since 1999, was reported last month to have hired banks for an initial public offering.
Nashville, Tennessee-based Amsurg's shares were up 8.2 percent at $46.32 in morning trading.
Bass, Berry & Sims PLC is Amsurg's legal counsel. Barclays, Credit Suisse and Goldman Sachs & Co are Sheridan's financial advisers and Simpson Thacher & Bartlett LLP is providing legal counsel.
(Reporting by Esha Dey and Natalie Grover in Bangalore; Editing by Saumyadeb Chakrabarty, Savio D'Souza and Kirti Pandey)