(Reuters) - Envision Healthcare Holdings Inc EVHC.N and AmSurg Corp AMSG.O have agreed to an all-stock merger that would create a healthcare service provider with a proforma market value of about $10 billion, the companies said on Wednesday.
The deal comes at a time when consolidation among health insurers and hospitals is placing downward pressure on costs throughout the industry.
The merged entity, called Envision Healthcare Corp, would offer services from pre-hospital care to acute, post-acute and outpatient care, the companies said in a statement.
Under the agreement, Envision shareholders will get 0.334 AmSurg share for each share held, the companies said. Envision shareholders would own about 53 percent of the combined company, with AmSurg investors holding the rest.
Envision shares fell 8 percent to $25.43 in extended trading, while AmSurg’s stock rose 1.6 percent to $78.73.
The combined company, to be headed by AmSurg Chief Executive Christopher Holden, will have an enterprise value of about $15 billion, based on Envision and AmSurg’s share prices as of Tuesday’s close.
Reuters reported last week, citing sources, that the two companies were in advanced merger talks.
Nashville, Tennessee-based AmSurg provides outsourced physician services to hospitals and other healthcare providers. It also operates more than 200 walk-in surgery facilities for patients who do not need overnight stays.
Envision, based in Greenwood Village, Colorado, also provides outsourced services, along with medical transportation services.
The deal is expected to result in synergies of $100 million within three years after it closes at the end of 2016, the companies said.
“The transaction is expected to be accretive to the two companies’ combined adjusted earnings per share in 2017 and double-digit accretive in 2018,” they said.
Evercore and Barclays are Envision’s financial advisers for the deal, while Guggenheim Securities and J.P. Morgan Securities LLC are advising AmSurg.
Reporting by Shailesh Kuber and Dipika Jain in Bengaluru; Editing by Kirti Pandey