A Merger Gets No Attention

On Monday, Allscripts announced that it will be merging with Misys Healthcare, a wholly-owned subsidiary of the UK firm Misys.  With all of the events taking place on Monday and Tuesday, this merger received absolutely no coverage (it was hard to even find a press release); however, this is no small news in the world of healthcare technology. 

TEL AVIV (MarketWatch) — Misys Plc, the London producer of financial-services and health-care solutions, agreed to acquire 54.5% of Allscripts, the Chicago provider of software for physicians. The deal entails the Misys Healthcare subsidiary merging with Allscripts, and Misys Plc contributing $330 million of cash to the new company. The new company, Allscripts-Misys Healthcare Solutions Inc., combines Misys Healthcare’s practice-management and Allscripts’ electronic-health-records businesses. Allscripts holders continue to have 45.5% of the company. They’ll receive a special dividend of $4.90 a share in the deal. Allscripts-Misys will trade on Nasdaq. After the deal, Allscripts’s senior managers would continue in their posts. And Misys Plc continues to own its Banking and Tresury & Capital Markets divisions and will continue to trade on the London Stock Exchange.

On a grand scale, this won’t be a major shake-up; however, this new company could present formidable competition to the other players in this market.  Allscripts has been very effective at gaining market share in recent years, and with their takeover of A4 Systems just a few years ago, they have acheived a great deal of growth.  This merger will allow their solutions to move into the European market, while giving Misys’ systems more market share in the U.S., which had been dwindling.  Misys needed some drastic upgrades to their systems, as their’s was one of the most de-installed systems in the medical practice space. 

From a more personal point of view, this is a great example as to how an individual trader/investor can take advantage of risk arbitrage opportunities, that typically only bulge bracket firms and hedge funds can enjoy. 

At the announcement of this news, Allscripts (MDRX) rose more than 10% at one point, while Misys saw more than 30% declines on the London Stock Exchange.  By buying Allsripts and shorting Misys, there was a great short term play opportunity.  Also, there were some good options chains associated with MDRX as well. 

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