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Allscripts and Misys Healthcare agree to merge

AllscriptsMisys Healthcare Solutions : 19 March, 2008  (Company News)
Allscripts and Misys Healthcare, a wholly-owned subsidiary of Misys 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 US physicians and 700 hospitals and will be 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 will contribute $330 million in cash to Allscripts, for which it will receive shares representing a 54.5 percent 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.

The current Allscripts management team will continue in their management roles at the combined company. Glen Tullman, chief executive officer of Allscripts, will serve as chief executive officer, and Bill Davis, chief financial officer of Allscripts, will serve as chief financial officer.

Mike Lawrie, chief executive of Misys, will serve as executive chairman of the Board of Directors. The new board will have 10 members, including Lawrie, Tullman, five directors nominated by Misys and three directors nominated by Allscripts. The combined company, which would have over 3,700 employees, will be headquartered in Chicago, Illinois.

“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 Tullman. “Improving US 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.”

'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.
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