Elliott Management, a New York hedge fund led by billionaire Paul Singer, is the favorite to win the athenahealth takeover bid now that Cerner and UnitedHealth have declined an opportunity to acquire the health IT company, according to a report in the New York Post.
The Sept. 6 report noted that “The healthcare companies that would most logically be interested in athenahealth, including Cerner Corp. and UnitedHealthcare, have taken a pass…” As such, Elliott— which says it owns 8.9 percent of the company’s common stock—has now teamed up with investment firm Bain Capital on its bid.
What’s also interesting is that Bain Capital owns Waystar, a healthcare technology company that was recently formed by combining Navicure and ZirMed, two revenue cycle management vendors. Waystar may benefit if Bain buys athenahealth, an industry banker told the New York Post.
As previously reported by Healthcare Informatics, in May, Elliott Management made an all-cash takeover offer to buy the Watertown, Mass.-based, athenahealth, at a valuation of $6.9 billion. The investors sent a letter to athenahealth’s board proposing to acquire the company for $160 per share. In the letter, the investors criticized leadership at the electronic health record (EHR) vendor for failing to make the changes necessary “to enable it to grow as it should and to create the kind of value its shareholders deserve.”
The story continued to take turns throughout the summer, particularly following the resignation of CEO and President Jonathan Bush in June. Bush’s resignation came just a few weeks after Elliott Management’s takeover bid, and just a few days after reports surfaced that the athenahealth chief had allegedly assaulted his ex-wife more than a decade ago, and also created a “sexually hostile environment” at the company.
Following the news, various companies, both inside and outside of healthcare, were brought up as possibilities to buy athenahealth, including the Kansas City-based EHR giant Cerner Corp. But now, the two private equity firms—Elliott and Bain—are considered the leaders to win the bid, according to the New York Post report.
What’s more, the report noted, “There are new signs athenahealth would welcome a sale…In a late Wednesday filing, athenahealth reported that ousted founder and Chief Executive Jonathan Bush would receive $4.8 million in a sale, and new executive chair and former GE boss Jeffrey Immelt was earning $150,000 a month in salary and $150,000 in restricted stock.” Immelt was appointed as the company’s executive chairman on June 6, the day of Bush’s departure.
Athenahealth will take second-round bids Sept. 17, and bids are expected to be around $160 a share, sources told the New York Post.