Veritas Capital, Elliott Management affiliate to buy athenahealth for $5.7B

Private equity firm Veritas Capital and Evergreen Coast Capital, an affiliate of hedge fund Elliott Management, have agreed to buy athenahealth for an estimated $5.7 billion in cash, ending a monthslong question over whether the Watertown, Mass.-based healthcare software vendor would remain independent or be acquired.

Here are six things to know about the acquisition:

1. Elliott, a hedge fund known for pursuing management shake-ups, purchased a 9.2 percent stake in athenahealth in May 2017. One year later, the firm made an unsolicited all-cash bid for athenahealth worth roughly $7 billion, offering to acquire the company at $160 per share. In June, athenahealth issued a statement that the company's board of directors had initiated a process to consider "strategic alternatives" for the company, which might include a sale or merger.

2. Under the agreement, athenahealth shareholders will receive $135 in cash per share, representing a premium of roughly 12 percent over the company's closing stock price on Nov. 9, the last trading day before the companies' acquisition announcement Nov. 12, and a premium of roughly 27 percent over the company's closing stock price on May 17, 2017, the day before Elliott's announcement that it had acquired a 9.2 percent interest in the company.

"After a thorough strategic review process, we have decided to enter this agreement with Veritas, which we believe maximizes value for our shareholders and accelerates our goal to transform healthcare," said athenahealth Executive Chairman Jeff Immelt.

3. Veritas, an investor focused on the government and technology sectors, and Elliott's private equity subsidiary Evergreen plan to combine athenahealth with Virence Health, a value-based care business Veritas acquired from GE Healthcare earlier this year. After the close of that transaction, the combined company will operate under the athenahealth brand and be headquartered in Watertown.

4. The combined company will be led by Virence Chairman and CEO Bob Segert, along with a leadership team comprising executives from both companies.

"We are excited by the opportunity to partner with athenahealth, one of the largest and most connected provider networks in the nation, to drive outcomes that matter the most to our customers," Mr. Segert said. "Athenahealth and Virence have complementary portfolios and highly talented people, and this combination expands our depth and reach across the continuum of care."

5. Elliott affiliate Evergreen will retain a minority investment stake in the combined company. Elliott, the firm that kick-started acquisition talks in May, has expressed support for the transaction. Elliott Partner Jesse Cohn said, "We are pleased to support this transformative transaction combining athenahealth and Virence, which we believe represents an outstanding, value-maximizing outcome for athenahealth shareholders."

6. The athenahealth board of directors unanimously approved the merger agreement. The companies expect to close the transaction in the first quarter of 2019, subject to approval from shareholders and the satisfaction of customary closing conditions and regulatory approvals.

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