قالب وردپرس درنا توس
Home / Business / Elliott's offer is a good medicine for a goal

Elliott's offer is a good medicine for a goal



The Offer from Elliott Management Corp. for Athenahealth Inc. is a good starting point for buyout calls.

The hedge fund released details of a $ 6.9 billion takeover bid for the healthcare IT company on Monday. The offer comes about a year after Elliott has announced a stake in Athenaehealth and sought, inter alia, discussions with the Board on a possible sale. The fact that Elliott himself would make a concrete offer means a significant increase in the ambitions for the private equity side of his business. The offer could be a means to press the negotiating table to Jonathan Bush, the controversial leader and co-founder of Athenaehealth. Whether Elliott becomes a buyer or not, Bush would be wise to seize the opportunity and leave the public market. Athenaehealth has said for the time being that it will review the proposal.

On the one hand, Elliott's offer looks opportunistic and comes just a few weeks into a post-fall decline of about 1

1 percent, as weak bookings in the first quarter made the future prospects of Athenaehealth skeptical. On the other hand, Elliott seems to be an investor whose patience is slowly diminishing. The company says that it raised Athenaehealth for the first time in November for a buyout, but the company refused to get involved. With the exception of Monday Pop, the stocks have jagged and jagged, but basically nowhere in time since then.

Ups and Downs

A buy-out might be the best option for Athenaehealth

Source: Bloomberg


Athenaehealth had to critically review its operational and financial strategy in August, according to Elliott's review. The company undertook to reduce costs and hire an independent chairman. It opted for General Electric Co.'s former general director, Jeff Immelt, whose operational capabilities Elliott has challenged. GE is now working on the impact of poor capital allocation decisions and mismanagement of its electricity business during its tenure.

The demand for Athenaehealth's key software products for healthcare providers seems to be waning, and it is finding it hard to penetrate new markets that are used by larger established companies such as Cerner Corp. and Epic Systems are dominated. At the same time, investors are eager to pursue Athenaehealth's cost-cutting initiatives and were frustrated that management was unable to meet its margin targets. These are the types of topics that tend to be best removed from the merciless glare of public markets.

Not Good Enough

The margin improvement has failed to prevent investors from worrying about Athenaehealth's slowdown in growth

Source: Bloomberg


Elliott offers $ 160 a share, up from around 6% , 9 billion dollars, including net debt. That's about 19 times the Athenaehealth's estimated Ebitda this year, according to Bloomberg data, and is a discount on the median paid for acquisitions of medical information systems worth more than $ 100 million over the past five years. However, on average, analysts forecast a price of just $ 143 for Athenaehealth shares, a target that would include at least some takeover, but also expectations for a slowdown in revenue growth over the next few years.

Elliotts offer could only be the opening Gambit. The hedge fund expanded the private equity side of its business in and completed a $ 1.6 billion buy-out of network technology company Gigamon Inc. late last year. But the company has in the past made offers to companies that initially were an investor before ultimately supporting an alternative bidder buyout. Elliott Offer for Compuware Corp. in 2012 and for Riverbed Technology Inc. in 2014; both were eventually sold to the private equity firm Thoma Bravo.