Athenahealth to be acquired by investment firms for $5.7B
After a lengthy search for a buyer, athenahealth has entered into a definitive agreement to be acquired for $5.7 billion in cash.
The purchasers are Veritas Capital and Evergreen Coast Capital (the private equity subsidiary of Elliott Management), which will buy athenahealth through an affiliate.
Under terms of the agreement, athenahealth shareholders will receive $135 in cash per share. That per share price represents a premium of about 12 percent over the company’s closing stock price on Friday, November 9, the last day of trading for the stock prior to the announcement.
However, that purchase price is about 16 percent less than the $160 originally offered for the company in early May by Elliott Management. At that time, Elliot Management already owned about 8.9 percent of athenahealth. At the time, the investment firm had been disappointed in the technology vendor’s financial performance and its future prospects. In October, athenahealth executives said it was weighing five offers for the company.
The transaction is expected to close in the first quarter of 2019, subject to the approval of the holders of a majority of athenahealth's outstanding shares and the satisfaction of customary closing conditions and regulatory approvals. The athenahealth board of directors has unanimously approved the merger agreement.
Following the closing of the acquisition, Veritas and Evergreen expect to combine athenahealth with Virence Health ("Virence"), the GE Healthcare value-based care assets that Veritas acquired earlier this year. The combined privately held healthcare information technology company is expected to operate under the athenahealth brand and be headquartered in Watertown, Mass. The company will be led by Virence chairman and chief executive officer Bob Segert and an executive leadership team comprised of executives from both companies.
"After a thorough strategic review process, we have decided to enter this agreement with Veritas, which we believe maximizes value for our shareholders and accelerates our goal to transform healthcare," said Jeff Immelt, executive chairman of athenahealth. "Combining with Virence will create new opportunities for collaboration and growth. Operating as a private company with Veritas's ownership and support will provide athenahealth with increased flexibility to achieve our purpose of unleashing our collective potential to transform healthcare."