Misys is set to buy US-based Medic in a $923 million (#584 million) cash deal which catapults the UK-based software and services company into the US medical information market.
Misys, which claims the acquisition is the largest ever made by a UK software company, develops and licenses vertical market application software running on Unix and Windows. It has annual sales of around #300 million, 57% in the UK and 43% in the rest of the world.
Kevin Lomax, chairman of Misys, commented: "Misys is strategically positioned in markets where application software is mission critical and spending on IT is set to grow most strongly. The IT healthcare market in the US demonstrates similar characteristics to those areas in which we currently operate. Medic is one of the leading players in this market, has modern products and a large customer base with resilient revenue streams."
As news of the acquisition broke, Misys' share price took a tumble of #1.76 to #14.72, a drop of around 8%. The fall was attributed to the way the deal has been structured, with Misys planning a rights issue to fund half the acquisition costs.
According to US reports, Medic has recently been suffering as a result of a number of delayed contracts, and will benefit from Misys' global distribution network. The deal will also help it compete against larger healthcare rivals such as HBO and Shared Medical Systems.
Officials at Misys confirmed that Medic's management team would remain with the company for "at least the next three years".
Analysts were divided over the deal. Several said this was a good time for Misys to enter the rapidly growing US healthcare market, especially as Medic had issued a profits warning in its March quarter, enabling Mysis to buy the company for a good price. Others disagreed.
Consultant Richard Holway told VNU Newswire that he believed companies should "stick to what they know best rather than diversifying into unknown vertical and geographical sectors".
The deal is expected to be completed by the end of October.
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