Veritas Capital, Elliott clinch $5.5 billion acquisition of Athenahealth: sources

Reuters

Published Nov 11, 2018 06:00PM ET

Updated Nov 11, 2018 06:10PM ET

Veritas Capital, Elliott clinch $5.5 billion acquisition of Athenahealth: sources

By Carl O'Donnell and Greg Roumeliotis

(Reuters) - Private equity firm Veritas Capital and hedge fund Elliott Management have agreed to acquire U.S. healthcare software maker Athenahealth Inc (O:ATHN) for $5.5 billion in cash, people familiar with the matter said on Sunday.

Athenahealth, whose cloud-based service is used to track revenue from patients, physicians and hospitals, had been under pressure to sell itself from Elliott, which has about a 9 percent stake in the company. As part of a restructuring effort this year, it has cut jobs and hired former General Electric Co (N:GE) Chief Executive Jeff Immelt as chairman.

The acquisition, which values Athenahealth at around $135 per share, will be announced on Monday, the sources said, asking not to be identified ahead of any official statement. Athnahealth shares ended trading on Friday at $120.35.

Athenahealth, Elliott and Veritas Capital did not immediately respond to requests for comment.

The deal comes just a few months after the departure of CEO Jonathan Bush last June. Bush, a nephew of former U.S. President George H.W. Bush, founded Athenahealth in 1997. He stepped down after issuing an apology following a newspaper report alleging he had assaulted his former wife 14 years earlier.

Elliott first made an unsolicited bid for Athenahealth in May of $160 per share. Since then, it has been in talks with various private equity firms about trying to buy the company, sources have said.

While activist investors such as Carl Icahn have acquired companies before, New York-based Elliott, with assets of more than $35 billion, is one of the few hedge funds with a dedicated team chasing buyouts.

A deal for Watertown, Massachusetts-based Athenahealth represents the largest deal to date for Elliott's private equity arm, which is called Evergreen. It is based in Menlo Park, California, and it is spearheaded by partner Jesse Cohn.