Allscripts, Eclipsys to merge for $1.3B

Allscripts, a provider of clinical software, information and connectivity technologies for physicians, and Eclipsys, a provider of systems and services for hospitals and clinicians, have signed a definitive agreement to merge in an all-stock transaction valued at approximately $1.3 billion.

Under terms of the merger agreement, Atlanta-based Eclipsys stockholders will receive 1.2 shares of Chicago-based Allscripts for each share of Eclipsys, a 19 percent premium based on the June 8 closing price.

The combined client base will include more than 180,000 U.S. physicians, 1,500 hospitals, and nearly 10,000 nursing homes, hospices, home care and other post-acute organizations, according to the companies.

Glen Tullman, CEO of Allscripts, will be the CEO of the combined company. Phil Pead, president and CEO of Eclipsys, will become chairman of the combined company and will focus on client and strategic relationships, product and process integration, strategy and the company’s international business. Bill Davis, chief financial officer (CFO) of Allscripts, will be the company’s CFO. Chris Perkins, CFO of Eclipsys, will lead the integration process of the two companies. The health IT companies also said that the combined company’s executive team will include the current officers of both Allscripts and Eclipsys.

The merger agreement has been approved by the board of directors of both Allscripts and Eclipsys. The board of directors of the combined company will “initially consist of a combination of the current directors of Allscripts and Eclipsys,” the companies said.

In addition, the transaction is subject to the completion of a secondary offering of Allscripts shares owned by Misys, currently the majority stockholder of Allscripts, and the completion of the Allscripts buyback from Misys of additional Allscripts shares owned by Misys, which will substantially reduce Misys’s share ownership of Allscripts prior to the closing of the merger. Misys will sell to the public in the secondary offering a minimum of approximately 36 million of its Allscripts shares. In addition, concurrent with the closing of the secondary offering, Allscripts will buy back from Misys approximately 24.4 million of its Allscripts shares at a price of $460 million in total, plus a payment of a premium of $117.4 million in connection with the sale by Misys of its controlling interest, for a total of $577.4 million.

The companies expect the merger to close in approximately four to six months. The combined company will have more than 5,500 employees.

The transaction is expected to be accretive to Allscripts' non-GAAP earnings beginning in calendar 2011.