Private equity firm Clayton, Dubilier & Rice said it would buy healthcare and physician services company Emergency Medical Services Corp for a discount price of about $3 billion.

At $64 a share, the deal is 9 percent below EMS' closing price of $70.66 on Friday. Canadian private equity firm Onex Corp , which holds a 31 percent stake, said it supported the buyout.

Shares of the company had surged some 30 percent since mid-December, when Emergency Medical said it was reviewing its strategic alternatives. They fell 10.8 percent to $63.05 in premarket trading after the deal was announced.

It's obviously a discount, but I'm not sure we're calling this a discount on value yet, said Kaufman Bros analyst Dawn Brock, who said she was still sorting through recent changes in EMS' debt and cash levels as well as the transaction fees involved.

There were clearly changes in the capital structure that I wasn't banking on in my valuation, Brock said.

The company's American Medical Response Inc unit provides ambulance services, and its EmCare Holdings business provides physician services to hospitals.

The parties valued the deal at $3.2 billion on Monday. It would be worth about $2.82 billion, based on the number of shares outstanding according to Emergency Medical's latest quarterly filing.

Plans call for the deal to close in the second quarter.

Onex said it planned to vote in favor of the sale. Under the deal terms, Onex and its co-investors will sell their remaining 13.7 million Emergency Medical shares, or 31 percent equity stake, for $878 million. According to the release from CD&R and EMS, Onex and its affiliates have sufficient voting power to approve the merger.

Based on the per-share cash cost of $6.67 to acquire the business in 2005, Onex is selling the stake for about 10 times what it paid, it said.

A source familiar with the matter had told Reuters on Sunday that Clayton, Dubilier & Rice was close to a deal for Emergency Medical.

Rival private equity firm Bain Capital had also been pursuing Emergency Medical Services, a source familiar with the matter previously told Reuters.

Private equity firms are sitting on substantial capital to invest and scouring the market for companies to buy, but in some recent cases have found themselves outbid.

Buyout firms including TPG Capital , Blackstone Group , Carlyle Group and Apollo Management recently lost out in an auction of Beckman Coulter when the medical diagnostics company sold itself to Danaher Corp for $5.8 billion.

Goldman Sachs & Co and BofA Merrill Lynch acted as financial advisers to EMS, while CD&R was advised by Barclays Capital , Deutsche Bank Securities Inc , Morgan Stanley & Co , RBC Capital Markets and UBS Investment Bank .

(Reporting by Lewis Krauskopf and Megan Davies; additional reporting by John Tilak in Toronto, editing by Gerald E. McCormick and Lisa Von Ahn)