The long rumored sale of Watertown-based Athenahealth appears to be a reality, and the company is expected to be merged with another company and remain in town.
The healthcare software company, which has its headquarters in the Arsenal on the Charles, has entered into an agreement to be sold for $5.7 billion to private equity firm Veritas Capital and hedge fund Evergreen Coast Capital, the company announced Monday.
Evergreen is the private equity arm of Elliott Management, which had a 9 percent stake in the company, according to a report by Reuters on Sunday. The sale is expected to close in the first quarter of 2019, “subject to the approval of the holders of a majority of Athenahealth’s outstanding shares and the satisfaction of customary closing conditions and regulatory approvals,” according to the announcement.
The new owners are expected to combine the company with Virence Health, the GE Healthcare Value-based Care assets, which was acquired by Veritas earlier this year. The combined company is expected to be headquartered in Watertown, according to the announcement, and the athenahealth Board of Directors has unanimously approved the merger agreement.
“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 Jeff Immelt, Executive Chairman of Athenahealth in the announcement. “Combining with Virence will create new opportunities for collaboration and growth. Operating as a private company with Veritas’s ownership and support will provide Athenahealth with increased flexibility to achieve our purpose of unleashing our collective potential to transform healthcare.”
“Virence and Athenahealth have differentiated and complementary solutions, deep relationships with their respective customer bases and a shared culture of commitment to innovation,” said Ramzi Musallam, CEO and Managing Partner of Veritas Capital in the announcement. “We look forward to leveraging our expertise in the sector, as well as the capabilities and solutions across both companies to provide superior value to customers, and create exciting growth opportunities for both sets of employees as (Virence Chairman and CEO) Bob (Segert) and the team build the future of healthcare IT.”
Under the agreement, Athena shareholders will receive $135 in cash per share, according to the company’s announcement, which represents a premium of approximately 12 percent over the company’s closing stock price on Nov. 9, 2018, the announcement said.
The company already cut jobs and brought in former General Electric CEO Jeff Immelt as chairman. In June, CEO and co-founder Jonathan Bush stepped down after reports that he had acted inappropriately with female employees.
Athenahealth owns the Arsenal on the Charles and has partnered with the Town of Watertown and the state’s Department of Conservation and Recreation in a program called I-Cubed to get funding to do $25 million in infrastructure projects around the Arsenal on the Charles in a deal that is predicated on adding 1,000 jobs on the site.