Reuters | Chicago-based healthcare software company Allscripts
said it was to buy rival Eclipsys in a $1.3 billion all-share deal, to
create a leader in electronic healthcare records.

The enlarged group’s client base will include over 180,000 doctors,
1,500 hospitals and nearly 10,000 nursing homes, and be better
positioned to access $30 billion in federal funds for the adoption of
electronic healthcare records, the companies said.


A doctor uses eRx NOW Web-based software from Allscripts to write prescriptions. (Allscripts photo) >>
 
“We are at the beginning of what we believe will be the fastest
transformation of any industry in U.S. history,” said Allscripts chief
executive Glen Tullman, who will head the merged company. Eclipsys
chief executive Phil Pead will become chairman of the combined group.

Combining Allscripts’ position in doctor surgeries with
Atlanta-based Eclipsys’s hospital IT solutions would create a company
uniquely positioned to capitalise on the move to electronic records,
Tullman said.

Separately, British software company Misys said it would cut its 55 percent stake in Allscripts to about 10 percent and return more than $1 billion to investors, leaving its shares up 20 percent at 0830 GMT.

Eclipsys investors will receive 1.2 Allscripts shares for each of their shares, representing a 19 percent premium on the closing price on Tuesday, the companies said in a statement.

Allscripts also upped its bookings expectations for the fourth quarter to about $117 million from $105-112 million previously, and said it expected results for the year to end-May to be at the high end of its guidance.

Misys, which created the Allscripts-Misys subsidiary in October 2008 through the merger of its healthcare business with Allscripts Healthcare Solutions, said it would focus on its banking software business.

Misys shares hit a 6-1/2 year high as analysts welcomed the effective break-up of the group. “Misys is doing absolutely the right thing in selling its stake in a highly overvalued business,” said Roger Phillips at Evolution.

“Although the management look opportunistic, having touted the long-term aspects of U.S healthcare IT for 18 months, they have created major shareholder value with this deal.”

Misys will sell about 68 million Allscripts shares via a placing and through buybacks by Allscripts, raising over $1.3 billion. It will return money to its shareholders via a tender offer.