Misys Healthcare To Merge with Allscripts; Triangle Entrepreneur in Both Companies’ Predecessors Quits

Raleigh, N.C. — Misys Healthcare, a division of U.K.-based Misys PLC, is being merged with Chicago-based Allscripts Healthcare Solutions in a deal worth $330 million.

Misys, the chief executive officer of which has been very critical of Misys Healthcare in the past, will acquire a 54 percent interest in Allscripts.

The combined entity will be based in Chicago. Both companies are focused on electronic healthcare records and related services.

While Allscripts management will run the combined company, the parent board of directors will include six members named by Misys and four by Allscripts.

What impact the merger, which is expected to close in the third quarter, will have on the Raleigh Misys Healthcare operation is not clear. For the time being, the existing management team will run the Misys business unit.

Allscripts had a Triangle connection before Tuesday’s announcement. Two years ago, Allscripts acquired A4 Health Solutions in Cary.

However, entrepreneur John McConnell, who founded Medic Computer that later was acquired by Misys and who owned A4, which was bought by Allscripts two years ago, resigned his Allscripts board seat in protest.

"I think both companies are weaker today," McConnell told The News & Observer in Raleigh."I think it's going to be a big challenge merging the two businesses. And I personally hate to see all the jobs that will be eliminated. The company talks about all the synergy savings. Wall Street calls it synergy. I call them people."

Shares in Allscripts (Nasdaq: MRDX) jumped 18 percent, or $1.64, on the news, trading at $10.40 in afternoon trading. Allscripts will use the $330 million to pay a one-time dividend of $4.90 per share to its shareholders. Existing shareholders will retain their shares. Shares closed at $9.75, up 99 cents.

Misys operates two divisions, the healthcare group and another focused on software. It is the third largest software developer in the U.K.

The combined company will be known as Allscripts-Misys Healthcare Solutions and will continue to trade on the Nasdaq.

Misys Chief Executive Officer Mike Lawrie will run the board of directors of the combined company. Allscripts Chief Executive Officer Glen Tullman will retain that title. Both the Misys and Allscripts boards have already approved the deal.

Once combined, the new Allscripts will have some 3,700 employees and more than 150,000 physicians as customers.

A combined company will produce $15 million to $20 million in savings, according to the companies.

“We see very strong revenue growth, and we see very strong profit growth going forward,'' Lawrie said in a conference call. As he has said in the past, Lawrie described the Misys Healthcare unit as a group that has “struggled.”

Lawrie took over at Misys is October of 2006 after management at that time failed in a bid to take the company private. Tom Skelton, the CEO of Misys Healthcare for six years, left the following January. Lawrie was critical of the healthcare business unit’s performance, calling results “unacceptable.”

“In Allscripts, we have found the perfect partner to complement and drive our business and position us to deliver superior value to our shareholders, clients and employees over the long term,” Lawrie added in a statement. “We have great respect for the Allscripts team and share highly compatible cultures. The employees of both companies will enjoy the benefits of being part of a clear industry leader with a broader suite of products that meet the individual needs of all practice sizes and specialties. We all look forward to working with Glen Tullman and his team to deliver on the tremendous potential of the combined company.”

Misys Healthcare employs some 700 people at its North Raleigh headquarters.