thenahealth picks bidders for next round, sources say
24 JUL 2018
Bain Capital and TPG are among the suitors athenahealth [NASDAQ:ATHN] has selected to participate in the second round of its sale process, said three sources briefed on the matter.
Hellman & Friedman has also qualified for the next round, said two of the sources and a fourth source briefed on the matter.
More than five parties, including one strategic, have qualified for the next round, two further sources briefed said. Initial bids for the Watertown, Massachusetts-based healthcare technology company came in at or marginally above USD 160 a share, some of the sources briefed said.
Elliott Management, through its private equity affiliate, continues to be actively involved in the sale process, two of the sources said. The fund, which owns an 8.9% stake in the company, could also consider rolling over its equity among its options and join up with a third party in a take-private transaction.
More than five parties, including one strategic, have qualified for the next round, two further sources briefed said. Initial bids for the Watertown, Massachusetts-based healthcare technology company came in at or marginally above USD 160 a share, some of the sources briefed said.
Elliott Management, through its private equity affiliate, continues to be actively involved in the sale process, two of the sources said. The fund, which owns an 8.9% stake in the company, could also consider rolling over its equity among its options and join up with a third party in a take-private transaction.
This news service reported on 11 July that athenahealth was collecting initial bids that week, with a handful of financial sponsors circling the company. Bain, The Blackstone Group, CVC Capital Partners, KKR, Silver Lake Partners, TPG and Vista Equity Partners were highlighted among potential suitors.
Formal management meetings for suitors are expected to kick off next week, four of the sources said. While some of the sponsors have started a dialogue with banks on leverage, no financing commitments have been asked for yet by the seller, some of the sources said. Further, no consortiums have been asked to be formed as of now, these sources added.
In early May, Elliott proposed to take the company private for USD 160 a share in cash, or about USD 6.5bn. The activist said in a letter that it could “substantially improve” its offer following due diligence.
A handful of sponsors decided not to bid on the company, as they deemed the valuation put on the table by Elliott to be too expensive, one of the sources said.
Last month, this news service reported that athenahealth had cast a wide net to reach out to financial sponsors and strategics for the process. Following pressure from Elliott and other investors, athenahealth announced in early June plans to search for a new CEO and consider strategic alternatives, mandating Lazard and Centerview Partners as its financial advisors.
One of the sources said that potential bidders knew that, to qualify for the next round, parties had to bid at around Elliott’s offer, with a view to using management meetings to evaluate further if a buyout makes sense from returns of investment standpoint.
Formal management meetings for suitors are expected to kick off next week, four of the sources said. While some of the sponsors have started a dialogue with banks on leverage, no financing commitments have been asked for yet by the seller, some of the sources said. Further, no consortiums have been asked to be formed as of now, these sources added.
In early May, Elliott proposed to take the company private for USD 160 a share in cash, or about USD 6.5bn. The activist said in a letter that it could “substantially improve” its offer following due diligence.
A handful of sponsors decided not to bid on the company, as they deemed the valuation put on the table by Elliott to be too expensive, one of the sources said.
Last month, this news service reported that athenahealth had cast a wide net to reach out to financial sponsors and strategics for the process. Following pressure from Elliott and other investors, athenahealth announced in early June plans to search for a new CEO and consider strategic alternatives, mandating Lazard and Centerview Partners as its financial advisors.
One of the sources said that potential bidders knew that, to qualify for the next round, parties had to bid at around Elliott’s offer, with a view to using management meetings to evaluate further if a buyout makes sense from returns of investment standpoint.
This news service previously reported that, while athenahealth’s expensive valuation continues to be an issue for potential bidders, there is plenty of financing available for a buyout. It was further reported that, while athenahealth is seen as a good company, in order to make the math work for a buyout, a prospective buyer has to have tremendous confidence in its ability to generate fast revenue growth and dramatically expand margins.
One of the sources cautioned that, once suitors “dig into the business further,” it is possible that “people are going to conclude that the Elliott valuation is pretty steep, making a buyout a struggle.” Another of the sources, however, said that a few of the sponsors circling the company appear to be bullish on athenahealth’s prospects.
Even with over 7x EBITDA leverage, an athenahealth sale would require a hefty equity check, another of the sources said.
athenahealth, Elliott and Bain declined comment. H&F and TPG did not respond to requests for comment.
Even with over 7x EBITDA leverage, an athenahealth sale would require a hefty equity check, another of the sources said.
athenahealth, Elliott and Bain declined comment. H&F and TPG did not respond to requests for comment.