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athenahealth Considering Elliott Management Acquisition Offer

athenahealth confirmed it is in talks with shareholders to actively review the Elliott Management acquisition offer.

athenahealth is considering Elliott Management's acquisition offer.

Source: Thinkstock

By Kate Monica

- athenahealth is seriously considering the Elliott Management acquisition offer for $160 a share, the health IT company’s management team confirmed in a public statement.

“The athenahealth Board of Directors takes very seriously its obligation to protect shareholders and to take only those actions that are in the best interests of all shareholders,” said athenahealth management.

“The Board currently is undertaking a thorough and deliberate analysis of Elliott Management's proposal to acquire the Company for $160 per share in cash and will continue to take the time necessary to complete this review notwithstanding Elliott Management's attempts to publicly pressure the Board and management team,” continued athenahealth leadership.

Elliott Management first made public its intention to acquire athenahealth for nearly $7 billion on May 7 in an open letter from Elliott Management Partner and Senior Portfolio Manager Jesse Cohn.

In the letter, Cohn stated Elliott Management has had constructive dialogue with athenahealth management in the past. However, Cohn revealed investors have become frustrated with the public health IT company’s hesitance to follow through on a take-private transaction or fix problems related to sales execution, service delivery, product focus, forecasting, and other areas of business.

On May 14, Elliott Management released a second open letter claiming athenahealth had not directly communicated with the hedge fund about its $7 billion offer. Elliott Management called the lack of communication “concerning.”

athenahealth management responded in its most recent statement that it has been communicating with Elliott Management and other shareholders consistently.

“Our record is clear: members of the athenahealth Board and management team have had an ongoing dialog with the Company's major shareholders, as well as Elliott Management, regarding the Company's business and the Elliott proposal,” maintained athenahealth leadership.

“Although the Company does not comment on the specifics of any conversation with its shareholders, this ongoing engagement has been constructive and has provided an opportunity for shareholders to share their perspectives with management and the Board,” athenahealth management continued.

athenahealth stated the assertions in Elliott Management’s open letter about the health IT company’s business practices and public status are not representative of the stances of all athenahealth shareholders.

“In addition, notwithstanding the assertions in Elliott Management's letter, the Company fully engaged with respect to Elliott's prior private proposal and, after careful analysis, the Board determined that the proposal was not in the best interests of the Company's shareholders,” stated athenahealth management. “The Company communicated the Board's determination to Elliott Management.”

While athenahealth initially did not believe Elliott Management’s proposal was in the best interest of all shareholders, a recent filing from a top athenahealth shareholder — Janus Henderson Group — revealed the investor had likewise expressed concern over athenahealth management’s poor execution of strategic initiatives.

Janus Henderson has 11.9 percent stake in athenahealth.

In light of this added pressure from investors, athenahealth stated it will “take into account the views of all of its shareholders” as it continues to evaluate Elliott Management’s proposal.

“The Board will take the time necessary to complete its work so that it can recommend only those actions that it determines are in the best interests of all shareholders,” stated athenahealth management.

“Meanwhile, athenahealth continues to play an innovative and valuable role in the healthcare industry. We sit in the very early days of the digitization of healthcare and the Company remains excited by its future,” the management team concluded.

The athenahealth Board and management team plan to communicate the results of their analysis of Elliott Management’s offer promptly.

As of May 7, Elliott Management had 8.9 percent stake in the health IT company. Together, Janus Henderson and Elliott Management own about 20 percent of athenahealth.

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