Virtual Radiologic said Monday it would buy rival teleradiology group NightHawk Radiology for nearly $170 million in cash.

Eden Prairie, Minn.-based, privately held Virtual Radiologic will buy all of NightHawk Radiology Holdings Inc.'s outstanding common stock for around $6.50 a share in cash, a 100 percent premium over the group's Friday closing price of $3.25 per share.

The transaction is expected to close in first quarter 2011 and is subject to regulatory and shareholder approval, the companies said. NightHawk's board of directors unanimously approved the deal, the Scottsdale, Ariz.-based business said.

The combined group will employ 325 radiologists and serve around 2,700 health care facilities across the country, reading nearly 6 million studies annually, the companies said.

"This combination - which brings together both companies' talented team members and affiliated radiologists - will expand access to much-needed subspecialty expertise, helping to improve the quality of patient care across the United States," Virtual Radiologic's president and CEO Rob Kill said in prepared remarks. "We look forward to working with NightHawk's talented team to deliver the highest quality radiology service in the country."

Kill will remain the head of the combined group. Dave Engert, NightHawk's president and CEO, will serve as board adviser after the transaction closes, the companies said.

Virtual Radiologic was bought by private equity firm Providence Equity Partners in July.

NightHawk's stock shop up 96 percent to reach $6.39 per share during morning trading on Nasdaq Monday.

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