Shares of Cotiviti Holdings Inc. (NYSE:COTV) were up 10.2% as of 1:00 p.m. EDT Tuesday after Veritas Capital agreed to acquire the healthcare payment solutions company.
Specifically, Veritas subsidiary Verscend Technologies will acquire Cotiviti for $44.75 per share in cash. That's a 12.2% premium from Monday's closing price, and a 32% premium from Cotiviti's "unaffected" share price as of June 4. Verscend will also assume Cotiviti's debt, bringing the enterprise value of the deal to roughly $4.9 billion.
Cotiviti CEO Doug Williams said: "We expect today's transaction to deliver compelling value for Cotiviti shareholders and allow us to continue to execute our strategic growth plan. We are excited to be combining with Verscend, and believe that together we will create an organization with robust data assets, expanded offerings, and innovative technologies that will allow us to bring a broader portfolio of new and existing payment accuracy analytical solutions to our valued customers."
Cotiviti also notes that the combined companies will employ largely complementary products "across multiple intervention points in the payment process," enabling them to have a "greater impact in the healthcare IT market."
The deal has been unanimously approved by Cotiviti's board of directors. So assuming it also passes regulatory muster and receives shareholder approval -- and the latter shouldn't be difficult considering Advent has already agreed, with shares representing roughly 44% of Cotiviti's total voting power -- it should close in the fourth quarter of 2018.
With shares trading within 2% of the agreed acquisition price -- and unless waiting longer to sell would mean more favorable treatment with long-term capital gains tax -- I think Cotiviti shareholders would do well to take their profits and put them to work elsewhere.