Foundation in Talks With Physicians Health

Woodland Hills-based Foundation Health Systems Inc. is in talks to buy Physicians Health Services Inc. for as much as $279 million, or $30 a share, the companies said. Physicians Health shares soared $3.75 to close at $26.625 on Nasdaq, while Foundation Health shares fell 75 cents to close at $27 on the NYSE. Physicians Health, based in Shelton, Conn., operates health maintenance organizations serving 425,000 members in Connecticut, New York and New Jersey. The move comes as Foundation Health expands into the Northeast. Physicians Health has been the subject of takeover speculation for about two years. Physicians Health posted a loss of $4.29 million, or 46 cents a share, on revenue of $129.9 million in 1996. Foundation Health is the fourth-largest managed-care company in the U.S.