A Medical Device Daily
The back and forth acquisition dance involving Merge Healthcare (Milwaukee), Amicas (Boston) and an affiliate of Thoma Bravo (Chicago), a private equity firm, came to an end late last week as Merge said that it is set to acquire all of the outstanding shares of Amicas for $6.05 or $248 million.
Prior to this latest piece of news, Thoma Bravo was set to acquire Merge for about $5.35 a share or roughly $217 million. The original agreement with Thoma Bravo was reported late last year (Medical Device Daily, Dec. 30, 2009).
Merge Healthcare made a bid for the company last month (MDD, Feb. 23, 2010). Initially Amicas seemed wary of the deal and expressed doubt about Merge's commitment and ability to close the proposed acquisition causing Merge to clarify its position (MDD, Feb. 25, 2010).
Sharelholders were initially set to vote on the Thoma Bravo acquisition on Feb. 19, but Barroway Topaz, a law firm, representing an Amicas shareholder, sought to enjoin the vote, arguing that the higher offer from Merge was being unlawfully hidden from the shareholders.
According to Lee Rudy, a partner with the Barroway, Topaz lawfirm, representatives from Amicas did not want to share the higher offer with shareholders, because Amicas management feared they would not be able to “retain their positions“ if they were purchased by Merge.
“They were also saying it because they thought the deal was illusory, risky and wasn't a real offer,“ Rudy told Medical Device Daily. “We were seeking injunctive relief, because [Amicas] needed to disclose the amount Merge was offering.“
Granting Rudy's motion, a Boston trial judge ruled on Feb. 18th that Amicas's proxy contained “materially deficient disclosures.“ Amicas then acknowledged that Merge had made a $6.05 per share offer for the company, which values Amicas at $248 million, a more than 13% increase over the Thoma Bravo bid.
In a statement Stephen Kahane, MD, president/CEO, and chairman of Amicas, said, “Throughout this process, Amicas' board has been focused on maximizing stockholder value and our agreement with Merge Healthcare demonstrates that commitment. We are proud of what we have built at Amicas, including the solutions we deliver, the intimate partnerships we have with our customers and the excellent reputation we have in the marketplace. This transaction with Merge validates the strength of the business we have built. We look forward to working with Merge to complete the transaction as expeditiously as possible.“
There are still some loose ends though.
For one, Amicas faces an $8.6 million termination fee for ending its previously reported agreement with Thoma Bravo. Half of the termination fee will be funded by Merge.
To finance the transaction Merge has obtained $240 million of debt and equity commitments. Merge said that it has executed a definitive commitment letter for $200 million of debt financing with Morgan Stanley Senior Funding.
The company said that it also has $40 million of equity purchase commitments from private investors for the issuance of Merge common stock and a new class of Merge non-voting preferred stock.
Both companies said that they expect to increase their healthcare IT offerings, by bringing together the best employees, customers and solutions in a broad array of image and information management and related solutions.
They said their combined solution portfolio will range from comprehensive automation solutions for cardiology and radiology providers to enterprise content management solutions for IDN's to OEM solutions for health IT applications to trial, site and patient management solutions for pharmaceutical, biotechnology, medical device and contract research organizations.
The companies expect to promptly execute a definitive merge acquisition Agreement for a two-step transaction.
The first step will be a cash tender offer for all of Amicas' outstanding common stock, and the tender offer is expected to commence in about two weeks.
The second step will be a merger pursuant to which any untendered shares of Amicas common stock will be converted into the right to receive the same $6.05 per share cash price. The tender offer and merger will be subject to certain closing conditions, including successful tender of a minimum number of shares of Amicas common stock, antitrust clearance and other regulatory approvals, and is expected to close in the 2Q10. There is no financing condition to the consummation of the transaction.
Omar Ford, 404-262-5546;