Allscripts, Misys announce merger

By Eric Wicklund
12:00 AM
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In a deal estimated to affect more than 150,000 U.S. physicians and another 700 hospitals, Allscripts and Misys Healthcare have announced a merger.

The transaction, announced early Tuesday morning, gives British-based Misys Plc a 54.5 percent stake in the combined company, in which Raleigh, NC-based Misys Healthcare will be folded into a wholly owned subsidiary of Allscripts.

Allscripts, based in Chicago, provides clinical software, connectivity and information solutions for physicians.

"This agreement changes the landscape in healthcare information technology by creating a single company that will serve roughly 150,000 physicians with our portfolio of electronic health record, practice management and other software solutions," said Allscripts CEO Glen Tullman, who will lead the combined company. "Improving U.S. healthcare requires the ability to connect all stakeholders through the continuum of care, and today we have taken a major step towards doing that, with nearly one out of three physicians in America as customers of the combined company.

Misys Healthcare had been rumored to be on the market for some time. Following a failed attempt at a management buyout in late 2006, the company, which does considerable global business in the banking and treasury & capital industry, hired Mike Lawrie as its new CEO. Lawrie announced an ambitious three- to five-year plan to turn the sagging healthcare unit around, hired Vern Davenport as vice president and general manager of the healthcare unit in February of 2007, and sold off its diagnostic systems and computerized patient records businesses last August in an effort to focus of software for physicians' offices.

 

"In Allscripts, we have found the perfect partner to complement and drive our business and position us to deliver superior value to our shareholders, clients and employees over the long term" said Lawrie. "We have great respect for the Allscripts team and share highly compatible cultures."

Under terms of the agreement, which has been approved by the boards of directors for both companies, Misys Plc will contribute $330 million in cash to Allscripts in exchange for shares representing a 54.5 percent ownership in the combined company. Allscripts, meanwhile, will pay a special cash dividend of $330 million, or approximately $4.90 per share, to Allscripts stockholders of record as of the last business day immediately prior to the closing of the transaction.

Misys has received a firm commitment from Lehman Brothers to provide debt financing and an underwriting commitment from ValueAct Capital Master Fund L.P. to provide equity financing for the cash portion of the transaction.

Tullman will continue to serve as CEO of the company and Bill Davis, Chief Financial Officer of Allscripts, will continue to serve as CFO. Lawrie will serve as executive chairman of a 10-member board of directors, which will consist of Lawrie, Tullman, five members appointed by Misys and three members appointed by Allscripts. The combined company, with an estimated 3,700 employees, will be headquartered in Chicago.

The combined company expects to receive annual pre-tax synergies of $15 million to $20 million in the first full year following the close of the transaction, increasing to total annual cost synergies of $25 million to $30 million in the years following.