athenahealth, the Watertown, Mass.-based health IT vendor, has retained the company’s financial advisors and hired legal counsel as it continues to analyze Elliott Management’s acquisition offer.
Earlier this month, investment firm Elliott Management sent a letter sent to athenahealth’s board of directors that proposed a $7 billion takeover of the healthcare company. Elliott said the bid of $160 per share represented “a premium of 27 percent to the current stock price,” and also “represents compelling, premium value to shareholders.” In the letter, the investment firm also said it may also be able to substantially improve the proposed price. Elliott, the New York hedge fund which says it owns 8.9 percent of the company’s common stock, and is led by billionaire Paul Singer, made an all-cash takeover offer, which would value athenahealth at $6.9 billion.
athenahealth, which said at the time of the offer that its board of directors would review the unsolicited acquisition proposal, released an updated statement last week, noting that “The board currently is undertaking a thorough and deliberate analysis of Elliott Management's proposal to acquire the company for $160 per share in cash and will continue to take the time necessary to complete this review notwithstanding Elliott Management's attempts to publicly pressure the board and management team. The board will communicate the results of this analysis and its recommendation promptly.”
The statement also said that Lazard and Centerview Partners have both been retained as financial advisors to assist the board in this analysis, and Weil, Gotshal & Manges LLP has been engaged as legal counsel to the company.
athenahealth’s statement read, “Our record is clear: members of the athenahealth board and management team have had an ongoing dialog with the company's major shareholders, as well as Elliott Management, regarding the company's business and the Elliott proposal. Although the company does not comment on the specifics of any conversation with its shareholders, this ongoing engagement has been constructive and has provided an opportunity for shareholders to share their perspectives with management and the board.”
The statement continued, “Based on our discussions with shareholders, we do not believe the positions set forth in Elliott Management's letter are representative of the positions of all of our shareholders. In addition, notwithstanding the assertions in Elliott Management's letter, the company fully engaged with respect to Elliott's prior private proposal and, after careful analysis, the board determined that the proposal was not in the best interests of the company's shareholders. The company communicated the board's determination to Elliott Management.”
In its proposal letter, Elliott wrote, “We are faced now with the stark reality that athenahealth as a public-company investment, despite all of its promise, has not worked for many years, is not working today and will not work in the future,”, specifically noting the company’s problems in the areas of sales execution, service delivery, product focus, forecasting, executive turnover, capital allocation, management discipline and corporate governance.
“It is clear to us and becoming clear to many others that athenahealth’s potential will never be realized without the kind of operational change that the company seems unable to deliver,” the letter read.