Posted April 24, 2008
Patient Safety and Quality Healthcare: Business News
Allscripts and Misys Healthcare to Create a Leader in Physician Solutions
London and Chicago, IL — Allscripts — the leading provider of clinical software, connectivity and information solutions that physicians use to improve healthcare — and Misys Healthcare LLC, a wholly-owned subsidiary of Misys Plc, announced that they have signed a definitive merger agreement. The transaction would significantly enhance Allscripts position in the overall healthcare information technology sector and create an industry leader in the growing electronic health records (EHR) and practice management (PM) markets. The combined company will have a client base of approximately 150,000 U.S. physicians and 700 hospitals and will be uniquely positioned to help physicians provide better patient care, manage their business more effectively and connect with their patients and other key healthcare stakeholders.
Under the terms of the agreement, which has been approved by the board of directors of both companies, Misys Healthcare will be merged with a wholly-owned subsidiary of Allscripts, and Misys Plc will contribute $330 million in cash to Allscripts, for which it will receive shares representing a 54.5% ownership position in the combined company. Allscripts 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. Allscripts stockholders would retain the shares they currently own.
In its 2007 fiscal year, which encompasses the period from June 1, 2006 to May 31, 2007, Misys Healthcare had revenues of £196, or approximately $376 million, and profit before exceptional items of £20.6, or approximately $39.5 million.1
The current Allscripts management team will continue in their management roles at the combined company. The combined company, which would have over 3,700 employees, will be headquartered in Chicago, Illinois. Allscripts will continue to trade on the NASDAQ under the MDRX ticker.
"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," stated Glen Tullman. "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."
Tullman continued, "Bringing Allscripts and Misys Healthcare together represents a compelling opportunity for stockholders of both companies to participate in a combined organization with significant potential, including a major cross-selling opportunity that will drive us forward in the years ahead."
Mike Lawrie, chief executive officer of Misys, said, "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. We have great respect for the Allscripts team and share highly compatible cultures. The employees of both companies will enjoy the benefits of being part of a clear industry leader with a broader suite of products that meet the individual needs of all practice sizes and specialties. We all look forward to working with Glen Tullman and his team to deliver on the tremendous potential of the combined company."
The combined company expects to achieve annual pre-tax cost synergies of $15 to $20 million in the first full year following the close of the transaction, increasing to total annual cost synergies of $25 to $30 million in the years that follow. The company also expects revenue synergies through cross-selling each company's product offering into each other's customer base.
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, both of which are subject to customary conditions. ValueAct has committed to voting in favor of the transaction. The transaction is not conditioned on financing and is expected to close in the next four to six months. The transaction is subject to the approval of the merger agreement by Misys shareholders, the approval by Allscripts shareholders of the issuance of shares in the transaction and certain amendments to Allscripts charter and bylaws, regulatory approvals and customary closing conditions.
Goldman, Sachs & Co. acted as the exclusive financial advisor to Allscripts and Sidley Austin LLP acted as legal counsel to Allscripts. Lehman Brothers acted as lead financial advisor to Misys and Debevoise & Plimpton LLP acted as legal counsel to Misys. Deutsche Bank AG also provided financial advice to Misys.
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