Misys Healthcare to merge with Allscripts
- 25 March 2008
Misys, the UK-based IT software group, is to merge its healthcare division with smaller US rival, Allscripts to create a larger specialist provider of clinical software and services for the US primary – or ambulatory – healthcare market.
In a deal worth almost £500m, Misys will combine Misys Healthcare with Allscripts to create Allscripts-Misys Healthcare Solutions Inc. Misys will have a 54% controlling stake in the new company, which will be listed on the Nasdaq.
According to the two firms, the merger will combine Misys Healthcare’s strength in practice management software and Allscripts’ strength in electronic health records, creating a single company with a combined customer base of approximately 150,000 physicians – almost a third of practicing US doctors.
The number of physicians using electronic health records in the US is growing, with the market expected to grow to about $5bn by 2015.
The deal will see Misys demerge, and retain 100% ownership of, its healthcare software business from its financial and banking division, which will retain a separate London listing.
Under the terms of the deal Mike Lawrie will become Executive Chairman of Allscripts-Misys and retain his role as CEO of Misys and Glen Tullman, CEO of Allscripts, will become CEO of Allscripts-Misys
Allscripts is headquartered in Chicago and distributes medications to 40,000 physicians in the US and more than 700 hospitals.
The deal is being paid for by a share placing to raise £75m. US hedge fund ValueAct Capital, the largest shareholder in Misys, will underwrite the share placing.
According to the Financial Times, Misys will contribute $330m in cash to the enlarged group and will own 54.5% on a fully diluted basis. Allscripts’ existing shareholders will receive a $330m special dividend following the completion of the deal.
Commenting on the Transaction, Mike Lawrie, chief executive of Misys, said: “There is a huge opportunity to capitalise on the fundamental shift taking place in the high growth, ambulatory healthcare sector where innovative technology can improve the delivery of care. Combining our businesses will create a company better able to take advantage of this opportunity and to maximise value for both sets of shareholders. “
Glen Tullman, chief executive of Allscripts, said: “The clinical software sector is growing rapidly. Merging two of the leading businesses within this sector will create a comprehensive platform of products and services that can better serve a wider range of customers and will capitalise on this opportunity.”
The merger is expected to create savings of $25m to $30m within three years.
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