By: Dexter Braff
After PE giant Blackstone recently announced it was acquiring TeamHealth, a shareholder lawsuit was filed alleging that the fix was in, noting that the TeamHealth board had previously passed on a far more lucrative offer.
And on the face of it, the facts look ominous:
In 2015, TeamHealth rejected a buyout proposal from AmSurg valued at $71.47 per share. Less than a year later, it accepted Blackstone’s bid of $43.50 per share.
Oh, and did we mention that Blackstone had previously owned TeamHealth before it went public in 2009?
And that TeamHealth’s advisor, Goldman Sachs (which journalist Matt Taibbi once famously described as “the great vampire squid”) not only “received some $165 million in fees from Blackstone during the past two years alone,” but also owned “nearly 5.8 million shares of Blackstone” (PitchBook)?
At the very least, it’s a Scooby-Doo head tilter.
But the devil is in the deal-tails.
YES, the buyout is just under $28.00 per share less than what AmSurg proposed,
BUT the AmSurg deal included only $15.00 plus per share in cash (the rest was stock, making the AmSurg deal more of a merger than a buyout) compared to Blackstone’s all cash offer.
YES the $43.50 price looks like a steal,
BUT it represented a premium of 33% over what TeamHealth was trading at “the day before news that the company was considering a sale went public” (The Motley Fool).
YES, it is certainly quibble-able that TeamHealth’s stock plunged from 54 to 33 bucks between Q3 2015 and Q3 2016,
BUT it is also at least partially explainable. You see, over that same period, TeamHealth’s liabilities grew by nearly $2.2 billion – about $29.00 in additional debt per share – in part to fund its $1.6 billion purchase of IPC Healthcare.
So, there’s quite a bit mitigating the potential litigating.
But one thing is for sure.
While Goldman may not be the great vampire squid, perhaps it isn’t such a good idea to have tentacles around both parties to a transaction.
Which, by the by, is why The Braff Group is a sell-side representative only.
No conflicts, no cephalopods.