Misys moves to sell healthcare stake

Misys, the British software company, in effect broke itself up on Wednesday when it agreed to sell its majority stake in its Allscripts healthcare subsidiary and return the proceeds of the $1.3bn (£900m) sale to shareholders.

The disposal is part of a complex transaction that will see Nasdaq-listed Allscripts buy US rival Eclipsys in an all-stock deal, creating a leader in US healthcare IT. Eclipsys shareholders will receive 1.2 Allscripts shares per Eclipsys share, equivalent to a 19 per cent premium on Tuesday’s closing price.

The sale of Allscripts, which specialises in digitising clinical records, will simplify the structure of Misys, whose combination of banking and healthcare software had confused investors and left it trading at a discount to rivals.

Under the terms of the deal, Misys will receive £900m in cash, more than 70 per cent of its market value. The company said £75m would be used to pay off its debts. It will retain a stake of about 8 to 10 per cent in the combined Allscripts-Eclipsys business.

Shares in Misys rose as much as 26 per cent yesterday after opening at their highest level in more than seven years. The deal provides a quick return for Misys which bought the majority stake in Allscripts for $325m in October 2008.

“This is a win-win situation. We are creating two important pure-play businesses – a leader in US healthcare software and a leader in financial software. And we are crystalising significant value for shareholders,” said Mike Lawrie, chief executive.

The merger of Allscripts and Misys was central to the UK company’s turnround, led by Mr Lawrie, which began in 2006. The deal transformed Misys by exposing more than half its revenues to the US healthcare market, which is expected to benefit from government spending on digitising medical records.

Yet the deal was met with scepticism from the City when it was unveiled two years ago. Many analysts felt the group had undervalued its healthcare software assets.

The sale will leave Misys to focus on software for banking and capital markets. Arun George, of Execution Noble, said that the business traded at 40 per cent discount to the sector.

Analysts said that if the company’s plans to launch upgraded software for banks is successful, this business could be valued at 312p-360p per share.

Misys also said Stephen Wilson has been made chief financial officer, replacing James Gelly, who returned to ValueAct, the US private equity group and majority shareholder in Misys.

Shares in Misys closed up 25½p at 249p. Eclipsys shares rose 1.19 per cent to $18.73.

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