Envision Healthcare (EVHC), AmSurg (AMSG) Merger Seen as Having Relatively Modest Benefits - KeyBanc

June 9, 2016 8:34 AM EDT
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KeyBanc analyst Jason Gurda commented on rumors AmSurg (NASDAQ: AMSG) and Envision Healthcare (NYSE: EVHC) are in merger talks. In his view, benefits of merging the two businesses would likely be "relatively modest, with rationale unclear."

"Overall, we believe the benefits of merging the two companies are likely to be relatively modest and would likely come from: 1) the opportunity to cross-sell EVHC’s emergency room physician business and AMSG’s anesthesiologist physician business; and 2) some corporate overhead savings. We believe there is less rationale for combining the other parts of the two companies, i.e., EVHC’s ambulance business and AMSG’s ambulatory surgery chain business," said Gurda.

The analyst added, "Although it is not clear how a deal would be structured, relatively high levels of debt at both companies suggest that it would largely be financed via stock rather than cash. Based on back of the envelope math, we believe the opportunity for near-term accretion is low. We believe the most likely scenario for a transaction would be AMSG offering EVHC a mostly or all-stock deal at a modest premium."

For an analyst ratings summary and ratings history on AmSurg click here. For more ratings news on AmSurg click here.

Shares of AmSurg closed at $77.91 yesterday.

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