AmSurg Corp. on Monday increased the cash portion of its offer for Team Health Holdings Inc. by $4 and gave the rival provider of outsourced physician services a Tuesday deadline to engage in talks.

A call seeking comment from a Team Health representative wasn't immediately returned.

Amsurg's new proposal values Team Health at $69.32, a premium of 16% from the close Friday and 32% from Oct. 19, the day before The Wall Street Journal reported on Amsurg's offer. However, the cash-and-stock bid is below the offer's original value of $71.47 because of the subsequent 10% decline in Amsurg's stock price.

As a result, Amsurg's latest bid is valued closer to $5 billion, whereas the previous offer was valued at more than $5 billion.

In its letter to Team Health's board, Amsurg argued that Team Health's stock price has withstood the recent decline in the hospital and emergency services sectors because of Amsurg's offer.

"Absent our public proposal, Team Health would likely have traded down," Amsurg said in the letter. "This revised proposal would represent a 40% 'headline premium.'"

Amsurg added that the deal would be withdrawn by 4 p.m. Tuesday if Team Health doesn't engage in talks.

The Knoxville, Tenn.-based Team Health rebuffed an AmSurg offer in October, pointing to insufficient value and the benefits tied to its planned deal to buy another outsourced-services provider, IPC Healthcare Inc., for about $1.4 billion.

AmSurg, of Nashville, Tenn., had gone public with its offers in an effort to put pressure on Team Health to negotiate a deal. There is significant shareholder overlap between the two companies, which could aid in that effort, according to people familiar with the matter.

The combined company's ownership would be split 50-50 between the two sets of shareholders.

Combining the two companies would create a major national provider of outsourced physician services, with a network of more than 1,200 hospitals and about 20,000 doctors.

It would have a significant presence in areas including anesthesia, emergency services, radiology and neonatology. AmSurg is a big player in so-called ambulatory surgery, with roughly 250 facilities that perform procedures that don't require an overnight stay.

Because of the recent moves in stock price, Team Health is considered the more valuable company. Team Health has a market capitalization of $4.3 billion, while AmSurg is at $3.4 billion.

Consolidation waves have swept through both the hospital and health-insurance industries, part of a broader surge in deal making in health-care and other sectors of the economy in recent years.

Write to Ezequiel Minaya at ezequiel.minaya@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

November 02, 2015 10:15 ET (15:15 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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