Merge Commences Tender Offer – Analyst Blog

Merge Healthcare Incorporated (MRGE) recently commenced a cash tender offer for all of the outstanding shares of AMICAS Inc. (AMCS). Merge is set to acquire AMICAS for $6.05 per share in cash, aggregating $248 million. The acquisition is expected to be completed in the second quarter of 2010.

 

The tender offer will expire at 12:00 midnight, New York City time, on April 15, 2010, unless extended. Any untendered shares of AMICAS common stock will be converted into a right to receive the same at $6.05 per share in cash.

 

Merge has already obtained $200 million of bridge financing from Morgan Stanley (MS) and $40 million of equity purchase commitments from private investors to fund the acquisition.

 

The successful acquisition of AMICAS will enable Merge to acquire one of its main competitors and widen its customer base. This will in turn expand the company’s top-line.

 

Merge is a health care software and services company focused on integrating radiology workflow to improve productivity, profitability and patient care by fusing business and clinical workflow, and intelligently managing and distributing diagnostic images and information throughout the health care enterprise.

 

Merge was paralyzed by several issues in the past such as a dwindling cash balance, management turnover, accounting miscues and litigations. The real turnaround started from the second quarter of 2008, when the company received the much-needed cash infusion of $20 million from Merrick RIS LLC in May 2008.

 

Presently, we have an ‘Underperform’ recommendation for Merge.