Shares of athenahealth Inc. (ATHN) jumped 9.7% as of 3:21 p.m. EST on Monday. The cloud-based healthcare technology provider announced earlier in the day that it was being acquired by Veritas Capital and Evergreen Coast Capital for $5.7 billion in cash, or $135 per share. This represented a 12.2% premium over athenahealth's closing price on Friday.
The acquisition itself wasn't all that surprising. In May, athenahealth announced that it was exploring strategic alternatives including a potential sale.
The timing wasn't unexpected, either. The company was initially scheduled to report its third-quarter earnings results on Nov. 1, with a conference call the following day. However, athenahealth delayed its Q3 results until Nov. 9, with the conference call rescheduled for today (and then canceled with today's acquisition news). Most investors likely suspected that something was up.
What might have surprised some investors, though, was the price tag of the acquisition. Elliott Management offered $160 per share for the company in May. But Elliott Management subsequently bought a 9% stake in athenahealth. Evergreen Coast Capital, one of the acquirers of athenahealth, is Elliott's private equity subsidiary. Elliott pushed for the current deal.
Although athenahealth's board of directors unanimously approved the acquisition, it must now be voted on by all shareholders. Large institutional investors control a majority of outstanding shares, so the decision rests with them. Assuming they vote in favor of the deal, the transaction should close in the first quarter of 2019.
As for athenahealth, assuming the acquisition goes through, it will be combined with Virence Health Technologies. Veritas acquired Virence from GE Healthcare earlier this year. The combined entity will still operate as athenahealth as a private company.