Misys to merge healthcare arm with U.S. rival
LONDON (Reuters) - British software company Misys
said on Tuesday it would merge its healthcare arm with Nasdaq-listed Allscripts, a deal it said would help raise group revenue growth to 7-9 percent next year.
The firm said it would raise around 75 million pounds ($150 million) in a share placing to help fund the deal, which will see it pay $330 million for a controlling 54.5 percent stake in the combined entity.
"Misys healthcare has struggled in the last couple of years, but this is all about .. taking a very powerful footprint in the U.S ... Misys will become a growth company again," Chief Executive Mike Lawrie told reporters, adding that the deal was a key stage of the company's turnaround launched a year ago.
Shares in Misys, down 23 percent in the year to date, were up over 20 percent at 170.75 pence by 5:02 a.m. EDT, valuing the firm at 863 million pounds.
The healthcare arm reported flat sales in the first half of this year, rising to 3 percent growth in the third quarter. Lawrie said the combined group -- to be called Allscripts-Misys and listed on the Nasdaq -- would be earnings accretive in the short term and grow at high single-digits in the first year.
This will produce overall growth for Misys of 7-9 percent in 2008/09, he added.
Allscripts-Misys will target the U.S. ambulatory market -- patients being treated outside hospitals. It will immediately have one in three U.S. physicians as clients.
"The healthcare market in the U.S is growing at more than twice Gross National Product (GDP), and is more immune to the ups and downs in the economic cycle," Lawrie said.
He will be executive chairman of the new company, which will be valued at just over $1 billion. Allscripts CEO Glen Tullman will be chief executive.
Separately, Misys said its third-quarter operating profit was up 166 percent at 15 million pounds and upgraded sales growth forecasts for the current year to 2-4 percent from 2-3 percent in January.
"We are still not seeing any slowdown in demand," Lawrie said. The group's banking division delivered 24 percent third- quarter growth, while the treasury and markets arm was up 15 percent.
(Reporting by John Bowker; Editing by Greg Mahlich and Erica Billingham)
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