Envision Healthcare Corporation and an entity controlled by funds affiliated with KKR have entered into a definitive agreement under which KKR’s portfolio company, Air Medical Group Holdings (AMGH), and Envision’s medical transportation subsidiary, American Medical Response (AMR), will combine to create a new industry leading medical transportation company. The transaction will be structured as a cash acquisition of AMR from Envision valued at USD2.4 billion.
The combination of AMGH and AMR will create an integrated medical transportation company with the capability to serve patients across multiple transport modalities in the patient’s time of need. The combined company is expected to transport more than five million patients per year through a fleet of air and ground ambulances across 46 states and the District of Columbia.
“We are pleased to have identified a strong partner for American Medical Response,” said Christopher A. Holden, Envision’s President and Chief Executive Officer. “The Envision leadership team conducted a robust process to review strategic alternatives for AMR. The agreement delivers on our commitment to continue the proud tradition of AMR and enables Envision to focus on its physician-centric strategy and ongoing services, including facility-based provider services, post-acute care and ambulatory surgery.”
“AMGH and AMR are preeminent providers of medical transportation responsible for delivering care to millions of patients every year. We are pleased to be able to bring together these two great companies and look forward to supporting the growth of the combined business,” said Jim Momtazee, Chairman of AMGH and Head of KKR’s Health Care industry team.
Randel G. Owen, Envision’s President of Ambulatory Services, will assume the role of President and Chief Executive Officer of the new combined company. “We are excited to bring together 27,000 AMR team members with 6,600 AMGH team members to deliver customized solutions in the communities we support,” Owen said. “We believe this partnership will create an exceptional medical transportation company that will allow us to provide seamless, reliable and quality patient care to communities and health systems. The breadth of this combined organization will enhance our ability to improve patient care in the ever changing healthcare landscape.”
Upon completion of the transaction, the combined company will adopt a new name that reflects the unique capabilities of the two organizations. Following the closing of the transaction, AMR and AMGH will continue to support operations from two key leadership locations in Greenwood Village, CO, and Lewisville, TX. The new company’s two divisions will continue to be led by strong leaders with extensive experience running medical transportation organizations.
Fred Buttrell will continue as President and Chief Executive Officer of the Air Medical division. “AMGH and AMR have worked together in many markets as well as disaster response and will have more integrated service offerings in the future for patients, health systems and regions. Together we will preserve the best attributes of each for the benefit of all stakeholders focusing on local market solutions. Employees will benefit from more opportunities as we expand our footprint into underserved communities,” he said.
Edward Van Horne will continue as President and Chief Executive Officer of the AMR division. “Our partnership with AMGH will enable us to further expand our one-source solutions for health systems and communities,” said Van Horne. “We can also continue to grow our innovative services in managed transportation, specialty fire services, Mobile Integrated Healthcare, event medical, federal disaster response and ambulance services across the U.S.”
Also, Michael Preissler, Chief Financial Officer at AMGH, and Thomas Cook, General Counsel at AMGH, will serve in the same roles for the combined company.
The pending acquisition is subject to regulatory approval and customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act, and is expected to close in the fourth quarter of 2017.
Preferred equity financing for the transaction is being provided by KKR primarily through its North America XI Fund and by Koch Equity Development LLC (KED), the investment and acquisition subsidiary of Koch Industries, Inc.
Guggenheim Securities is acting as exclusive financial advisor and Bass, Berry & Sims is acting as legal advisor to Envision. Barclays is acting as financial advisor and Simpson Thacher & Barlett LLP is acting as legal advisor to AMGH. Citi and Goldman Sachs are acting as financial advisors and Fried, Frank, Harris, Shriver, & Jacobson LLP is acting as legal advisor to KED.