(Reuters) - Buyout firm KKR & Co LLP (KKR.N) is in advanced talks to buy Envision Healthcare Corp’s (EVHC.N) ambulance business and merge it with Air Medical Group, a medical helicopter operator it acquired two years ago, people familiar with the matter said.
A deal would combine the largest U.S. provider of ambulance services with a leading operator of medical helicopters. It would also help streamline Envision’s business after its $10 billion merger with peer AmSurg Corp late last year.
KKR has prevailed in the auction for Envision’s business with a bid worth around $2 billion, and is in the process of negotiating final terms, the people said on Wednesday. A deal could be announced as early as this month, the people added, cautioning that there is always a possibility that the talks end unsuccessfully.
The sources asked not to be identified because the negotiations are confidential. Envision did not immediately respond to a request for comment, while KKR declined to comment.
For Air Medical, a combination with American Medical Response (AMR) would allow it to more easily substitute costly helicopter flights with ambulances for shorter trips.
The deal will also enable Envision to sharpen its focus on its core business lines of providing services to physician practice groups and operating outpatient surgery centers.
AMR has been a source of steady growth for Envision, but has not kept pace with its core provider services business, where Envision is the largest player in the sector.
Envision has also been reviewing options for its population health management division, which it said lacks the scale to be as competitive in the space as they would like. It recently terminated the businesses most significant contract.
The provider services market has been rapidly consolidating in recent years, largely in an attempt to keep pace with consolidation among the hospitals they serve.
Envision has said it hopes to strengthen its leadership role in the fragmented sector by rolling up smaller competitors and cutting out costs.
The medical transportation sector has also seen significant deal activity in recent months, with buyout firm American Securities acquiring Air Methods, another medical helicopter provider, for $2.5 billion in April.
(This version of the story has been refiled to add dropped word “in” in first paragraph)
Reporting by Carl O'Donnell in New York