The reciprocal benefits of synergy don't come cheap in the healthcare information technology marketplace. Misys Plc. is merging its Misys Healthcare LLC subsidiary with a wholly-owned subsidiary of Allscripts and contributing $330 million to the Chicago-based company. Allscripts, meanwhile, is paying a special dividend of approximately $4.50 per share to its stockholders of record, a cash value of $330 million, and allowing them to retain the shares they currently own.
The transaction received approval from both companies' boards of directors and gives British-based Misys a 54.5 percent stake in the combined entity. Allscripts expects the new company to serve nearly one out of three physicians in America, expanding its client base to approximately 150,000 U.S. physicians and 700 hospitals. The company says the merger will uniquely position them to help these physicians provide better patient care, manage their business more effectively and connect with their patients and other key healthcare stakeholders.
The combined company will retain the current Allscripts management staff, including Glen Tullman, who will continue in his role as CEO. According to a company press release, Tullman says, "Improving U.S. healthcare requires the ability to connect all stakeholders through the continuum of care, and we have taken a major step toward that." Mike Lawrie, CEO of Misys, says, "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." Lawrie, who will serve the merged entity as executive chairman of the board of directors, went on to say in a Misys press release, "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."
The new company will retain Allscripts' headquarters in Chicago and conduct business under the name Allscripts-Misys Healthcare Solutions. According to the press releases issued by both companies, it is expected to begin earning pre-tax annual revenue of $15 to $20 million during the first full year following the close of the transaction. Afterward, these numbers are expected to increase to between $25 and $30 million annually.
Misys Healthcare reported revenues of approximately $376 million in its 2007 fiscal year and Allscripts anticipates the merger will significantly enhance its position in the healthcare IT sector, and provide it a competitive edge in the expanding electronic health record and practice management product markets.