Daniel Becerril/Reuters
Jeff Immelt, now the chairman of Athenahealth, delivers a speech.
- Two big investment firms, Veritas Capital and Elliott Management, will acquire Athenahealth for about $5.7 billion in cash.
- The deal values Athenahealth at $135 a share. Elliott had long been pushing Athenahealth to sell itself, and at one point offered $160 a share.
- Athenahealth's CEO resigned in June, helping clear a path for the sale.
Private equity firm Veritas Capital and hedge fund Elliott Management agreed to acquire U.S. healthcare software maker Athenahealth Inc for $5.7 billion in cash.
Athenahealth, whose cloud-based service is used to track revenue from patients, physicians and hospitals, had been under pressure to sell itself from Elliott, which has about a 9 percent stake in the company. As part of a restructuring effort this year, it has cut jobs and hired former General Electric Co Chief Executive Jeff Immelt as chairman.
The acquisition values Athenahealth at $135 per share, according to a statement on Monday. Athenahealth will be combined with another company that Veritas acquired earlier this year, called Virence Health. Athnahealth shares ended trading on Friday at $120.35.
The deal comes just a few months after the departure of Athenahealth CEO Jonathan Bush in June. Bush, a nephew of former U.S. President George H.W. Bush, founded Athenahealth in 1997. He stepped down after issuing an apology following a newspaper report alleging he had assaulted his former wife 14 years earlier.
Elliott first made an unsolicited bid for Athenahealth in May of $160 per share. Since then, it has been in talks with various private equity firms about trying to buy the company, sources have said.
While activist investors such as Carl Icahn have acquired companies before, New York-based Elliott, with assets of more than $35 billion, is one of the few hedge funds with a dedicated team chasing buyouts.
A deal for Watertown, Massachusetts-based Athenahealth represents the largest deal to date for Elliott's private equity arm, which is called Evergreen Coast Capital. It is based in Menlo Park, California, and it is spearheaded by partner Jesse Cohn.
The combined Athenahealth-Virence will be led by Virence CEO Bob Segert, though it's keeping the Athenahealth name. The companies said they expect the deal to be completed in the first quarter of next year.
In its third-quarter results reported last Friday, Athenahealth said its revenue under its previous accounting standards was $331.4 million, an increase of 9 percent compared to the same period last year. Its net income over the three months that ended Sept. 30, 2018 was $44.5 million, or $1.08 per diluted share.
(Reporting by Carl O'Donnell and Greg Roumeliotis in New York; Additional reporting by Liana B. Baker in New York; Editing by Peter Cooney and Sandra Maler)
