Hedge fund Elliot Management and private equity company Veritas Capital have reportedly joined hands to buy the U.S.-based healthcare software manufacturer Athenahealth for USD 5.5 billion in an all-cash deal. As per people familiar with the development, the acquisition is likely to be announced soon.
Sources claim that Athenahealth had been under pressure to divest itself from Elliot which has around a 9 percent stake in the firm. For the record, the cloud-based service of Athenahealth is utilized to track revenue from physicians, patients, and hospitals. The company cut jobs as part of a restructuring effort this year and hired former Chief Executive Officer of General Electric Jeff Immelt as the Chairman.
Reportedly, the acquisition values Athenahealth at about USD 135 per share. According to a report published by The Financial Times, Elliot had approached Athenahealth with a USD 160-per-share offer in May this year. The company stated that Athenahealth was one of the largest beneficiaries of the rules announced under the Obama administration which mandated doctors to move their paper files to computerized systems. The activist fund lambasted the board for failing to correct a host of identifiable operational issues and that Athenahealth was doomed to underperformance as a public firm.
Reportedly, cumbersome technology left Athenahealth vulnerable to competition from companies using advanced technology such as artificial intelligence and big data to assist physicians. The third-quarter revenue of the company fell short of forecasts made by analysts, cite sources.
The acquisition by Veritas Capital, which has some USD 10 billion of assets under management, would be among the biggest ever by the New York-based company. It reportedly made a slew of takeovers in the past few years, including the acquisition of a unit from GE Healthcare for just under USD 1.1 billion.
Veritas Capital, Elliott, and Athenahealth did not immediately respond to requests for comment, cite reliable sources.