Allscripts-Misys to merge with rival in $1.3 billion deal
Posted June 9, 2010
Raleigh, N.C. — Allscripts-Misys Healthcare Solutions (Nasdaq: MDRX), which has a major presence in the Triangle, and its one-time rival Eclipsys (Nasdaq: ECLP) are combining in a $1.35 billion all-stock deal, the companies announced early Wednesday.
Eclipsys shareholders will receive 1.2 shares in Allscripts for each of their shares.
Allscripts-Misys is based in Chicago. Eclipsys is based in Atlanta.
Misys Healthcare, which was based in Raleigh, acquired Allscripts in 2008. Misys Healthcare took on the Allscripts name.
The Wall Street Journal first reported on the merger. According to its report, the combined company will reach one of every three U.S. doctors and one-third of all U.S. hospitals with 200 or more beds.
The deal represents a 19 percent premium for Eclipsys shareholders.
Allscript shares closed at $18.42 Tuesday but were up 16 cents in trading overnight.
Eclipsys shares, which closed at $18.51 Tuesday, jumped nearly 2 percent to $18.85 in overnight trading.
Misys and Allscripts have a strong history and legacy in the Triangle.
In 2008, Misys Healthcare acquired more than a 50 percent interest in Allscripts, which maintained a major presence in Cary. Allscripts had acquired Cary-based A4 Health Solutions.
Glen Tullman, chief executive officer at Allscripts, will be the CEO of the merged operation.
Phil Pead, CEO at Eclipsys, will be the combined company’s chairman and, “on a full-time basis,” focus on “on key client and strategic relationships, product and process integration, strategy and the company's international business,” the companies said in a joint announcement.
According to Allscripts-Misys and Eclipsys, the “combined company will be positioned to connect physicians, other care providers and patients wherever care is provided – in the hospital, in small or large physician practices, in extended care facilities or in a patient's home – resulting in the unique ability to deliver a single patient record and a seamless patient experience.”
The deal is expected to close within six months.
Misys, which is the majority owner of Allscripts-Misys, will be selling shares to Allscripts as part of a buyback plan. Misys also intends to execute an offering of Allscript shares.
The combined company will have some 5,500 employees.
The firms expect the merger to produce “over $100 million in cost savings” during the first three years after the merger is completed.
Credit Suisse, which also has a large operation in the Triangle, is Misys’ financial adviser in the deal.
Misys said it plans to sell some 36 million Allscript shares to reduce its holdings to 10 percent from 55 percent. Allscripts will buy back 24.4 million shares from Misys for $460 million, or $18.82 per share, as well as a $117.4 million premium.
To execute the merger and stock buyback, Allscripts-Misys lined up $720 million in credit from JP Morgan, Barclays Capital and UBS.
"We are at the beginning of what we believe will be the single fastest transformation of any industry in U.S. history, and the combination of the Allscripts Electronic Health Record portfolio in the physician office and leadership in the post-acute care market, with Eclipsys's market-leading hospital enterprise solution, creates the one company uniquely positioned to execute on this significant opportunity," Tullman said.
The companies said they will be looking to capitalize on opportunities in electronic medical records created by federal funding of some $30 billion.
The boards at both companies have approved the merger.
"The combined company will be unique among healthcare IT companies not only in our ability to drive utilization, but also in our ability to quickly integrate our solutions and connect clinical information across every link in the healthcare chain. In combination with our powerful analytics and revenue cycle solutions, healthcare organizations will finally be able to realize the true promise of information technology, improving both clinical and financial outcomes across the entire community of care," Pead said.