UPDATE 2-Thoma Bravo, Francisco, THL await Merge outcome-sources

Wed Dec 5, 2012 4:36pm EST

* Revised offers were due Nov. 29 -sources

* Some private equity suitors see sale losing momentum -sources

* Merge Healthcare shares close down 9.3 percent

By Greg Roumeliotis and Soyoung Kim

NEW YORK, Dec 5 (Reuters) - Private equity firms vying for Merge Healthcare Inc are waiting for a decision from the company after the provider of medical imaging software solutions sought revised takeover offers last week, three people familiar with the matter said on Wednesday.

Chicago, Illinois-based Merge asked the few buyout firms that remained in the auction - Thoma Bravo LLC, Thomas H. Lee Partners LP and Francisco Partners - to resubmit final bids by Nov. 29, the people said.

Some of the bidders believe that Merge is fully valued at its current stock price at around $3 per share and any deal would not offer much upside over the current trading level, the people said.

The request to "refresh" bids was seen by some private equity suitors as a sign that the auction has lost momentum and Merge may struggle to get an offer that meets its price expectations, two of the people said, requesting anonymity because details of the process are private.

Merge declined to comment. Representatives of Thoma Bravo, Thomas H. Lee and Francisco also declined to comment.

Merge shares ended trading down 9.3 percent at $2.82 on Wednesday after hitting an intra-day low of $2.60, their lowest level since June 28. The company has a market value of around $260 million.

GTCR LLC, Welsh Carson Anderson & Stowe and Avista Capital Partners were among other buyout firms that were pursuing an acquisition of Merge earlier on, people familiar with the matter told Reuters in November.

"We believe that the negotiations here are in the final stages and, if financing terms and borrowing capacity are amenable, Merge will be able to make a final decision on whether to accept deal pricing within two to three weeks," Baird Equity Research analysts wrote in a note on Nov. 27.

Merge Healthcare said in September that it appointed New York-based investment bank Allen & Company LLC to evaluate strategic alternatives, including a possible sale. The company reported a third-quarter net loss per diluted share of 4 cents, four times the loss it posted in the third quarter of 2011.

Merge Healthcare competed with Thoma Bravo in March 2010 when it agreed to buy AMICAS, a provider of healthcare imaging solutions, for $248 million, scuppering a merger agreement with the private equity firm.

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