Private-Equity Firm To Buy Emergency Medical Services Corp. for $3.2B - News - @

Private-Equity Firm To Buy Emergency Medical Services Corp. for $3.2B

Current EMSC shareholders will get $64 for each share of EMSC Class A and Class B common stock.


JEMS | | Monday, February 14, 2011

An affiliate of private-equity firm Clayton, Dubilier & Rice said Monday it is buying Emergency Medical Services Corp. for $3.2 billion and will take the Colorado company private, following months of takeover rumors surrounding EMSC.

The acquisition by New York- and London-based CD&R has been approved by the board of the Greenwood Village-based ambulance and physician-services company (NYSE: EMS), the parties said. While the deal needs shareholder approval, Monday's announcement said that Canadian private-equity firm Onex Corp. and its affiliates, which created EMSC, "have sufficient voting power to approve the merger, and have agreed to vote in favor of adoption of the merger agreement."

Under the deal, current EMSC shareholders will get $64 for each share of EMSC Class A and Class B common stock and each LP Exchangeable Unit. Shares opened Monday's trading at $70.73. Subject to regulatory approval, the deal is slated to close in the second quarter, the parties said. EMSC had said in December that it was “reviewing various strategic alternatives to enhance stockholder value."

That announcement came after investment-information website DealReporter said EMSC had hired Goldman Sachs Group Inc. to explore a sale of the company, triggering Wall Street speculation that the company was on the block. Analysts say that a number of health care companies have been considering mergers and buyouts in advance of the federal health care overall taking full effect in 2014.

"Our partnership with Onex over the past six years has enabled us to build a world-class health care company," William A. Sanger, EMSC's chairman and CEO, said in a statement. "In the next stage of our evolution, EMSC’s agreement with CD&R and the transition to a privately-held company will greatly enhance our flexibility and growth opportunities in the future. We are pleased that with this transaction, we are able to maximize stockholder return while — with our new global equity partner — further positioning EMSC to play a significant role in delivering quality, cost-effective care for our patients in the era of health care reform."

EMSC operates two main business units: American Medical Response Inc., the nation's largest private ambulance service, and EmCare Holdings Inc. (EmCare), which provides outsourced facility-based physician services segment. Onex formed what is now EMSC after American Medial Response and EmCare were acquired from Laidlaw International Inc. in 2004. EMSC went public a year later, but Onex still has a controlling interest. EMSC has 25,000 employees and posted 2009 net income of $115.2 million. In the third quarter of 2010 it reported net income of $36.8 million, up from the Q3 2009 figure of $28.9 million.

"EMSC is an exceptionally high quality and successful company with an outstanding management team and world-class workforce led by Bill Sanger," Richard J. Schnall, a partner at CD&R, said in the announcement. “The company is poised for continued strong growth due to its leading market position, operational effectiveness and the value it brings to its customer base."

Given Monday's announcement, EMSC said it will not be issuing an earnings release and will not host a conference call on its results for the fourth quarter of 2010. It said it will its 10-K 2010 annual report later this month. CD&R said it has financing commitments from Barclays Capital, Deutsche Bank Securities Inc., BofA Merrill Lynch, affiliates of Morgan Stanley, RBC Capital Markets and UBS Investment Bank as well as its equity financing.

Goldman, Sachs & Co. and BofA Merrill Lynch acted as financial advisors to EMSC. Kaye Scholer LLP is advising EMSC on legal matters in connection with the transaction. Barclays Capital, Deutsche Bank Securities Inc., Morgan Stanley & Co., RBC Capital Markets and UBS Investment Bank acted as financial advisors, and Debevoise & Plimpton LLP acted as legal advisor to CD&R.

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