TeamHealth has been the target of activist investor Jana Partners LLC since February, when the hedge fund disclosed an 8 per cent stake in the company. Jana has agreed to vote in favor of the Blackstone transaction, TeamHealth said.
Blackstone's purchase price of $43.50 per share is a 33 per cent premium to TeamHealth's closing stock price on Oct. 3, the last trading day before reports surfaced that the companies were in talks.
TeamHealth was trading at $42.80 on Monday, up 16.3 per cent from Friday's close, while Blackstone dipped 0.5 per cent to $25.38.
The deal, to close in the first quarter of 2017, comes less than two months after TeamHealth named industry veteran Leif Murphy as chief executive officer, replacing retiring Michael Snow.
The US physician services industry has been rapidly consolidating to counter rising administrative costs from President Barack Obama's Affordable Care Act and the desire to offer a broader array of services to hospitals.
Rival Amsurg Corp, whose $5 billion bid for TeamHealth was snubbed last year, agreed in June to merge with Envision Healthcare Holdings Inc.
Following its rejection of Amsurg's offer, TeamHealth in November acquired smaller peer IPC Healthcare Inc for $1.6 billion.
TeamHealth, which offers outsourcing services, including emergency medicine, anesthesiology and ambulatory care, to hospitals and physician groups, had outstanding debt of $2.47 billion as of June 30.
Reuters earlier this month reported Blackstone was the lead bidder for the Knoxville, Tennessee-based company, citing sources.
TeamHealth agreed in March to add three directors to its board following a deal with Jana, which had criticized its "missteps in critical areas including capital allocation, strategy and governance."
Murphy most recently was executive vice president of LifePoint Health Inc, which owns and operates U.S. hospitals, physician practices and outpatient centers.
Goldman Sachs is the lead financial adviser and Citi the co-financial adviser to TeamHealth, while Simpson Thacher & Bartlett is the legal counsel.
BofA Merrill Lynch is Blackstone's financial adviser, while Kirkland & Ellis LLP and Ropes & Gray LLP are its legal counsel.
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